Seller finance questions

[Leo Singer]

Hi everyone!

I’m new to BP and working on my first deal. I wanted to see if anyone could provide me a little insight on some of the intricacies of seller finance.

The seller is a close family friend who has told me they are willing to sell me the property below market value. The property is in a great neighborhood that is renter friendly. The seller owns the house outright and understands this will be a rental property.

I plan to speak to the seller about seller financing. The numbers work well for both parties, but I know the seller will have questions around a few of the moving parts of making the deal happen. More specifically, some of the questions I need some help with are:

How do seller finance contracts work? Do we simply need an attorney to write a contract up based upon the structure we agree to.

What tax implications are there for the seller?

Is the closing process similar to a traditional closing process when obtaining lending from a bank?

Sorry if these questions are elementary, I want to ensure that I am able to answer these when they come my way.

Thanks!