3 Reasons Seller Financing is Easier to Find and Negotiate Than Y

[Jeff Stephens]

Many of us are intrigued by the idea of doing deals with Seller Financing (aka “Owner Financing”). We know it could unlock our ability to buy a lot more properties, a lot sooner, and with greater ease, because we could completely avoid the limitations and lending criteria of banks.

But we also tend to believe that Seller Financing is rare and hard to find (especially in a competitive Seller’s market), or that it’s difficult to negotiate even if you can find it.

That may just be a limiting belief, however. Here are 3 simple reasons Seller Financing is easier to find and negotiate than you may think.

#1: There Are ALWAYS People Who Want to Defer Capital Gains Tax

One of the main motivators for many Sellers who end up doing Seller Financing is the deferral of capital gains taxes. Many Sellers feel stuck, because they a) don’t want to pay the tax and b) don’t want to do a 1031 exchange, to simply trade into yet another responsibility. So when you come along and offer them a path that allows them to avoid both the tax bill and the purchase of another property, you are a valuable Buyer to them. Thoughtfully structured Seller Financing can help them ease their capital gains pain without needing to exchange into another property.

#2: The Low Interest Rate Environment Means Financially Conservative Sellers Can’t Generate Much Income on Their Proceeds through Bank Deposits

Many non-owner occupant property owners bought their properties as a way to safely create an income stream. So if they sell the property, how will they continue generating income? Those who are financially conservative are not comfortable with the stock market, and simply want to put their money where they feel it’s safe—like in a bank. But with bank deposits paying so incredibly little right now, they need a way to continue generating income after they sell. Thoughtfully structured Seller Financing can help them continue to earn a monthly income, without the responsibility of owning property.

#3: If You Know What to Listen For, Sellers Are Often Practically ASKING You to Propose Seller Financing

The problem many investors have is that they propose Seller Financing from a selfish perspective—it’s what THEY want or need. But a proposal is always more powerful when it’s framed in terms of what the OTHER person (the Seller) wants. And if you train your ears to listen for all the many clues a Seller will give you (a couple of which I described in #1 and #2 above), you’ll find that the Seller often opens the door to Seller Financing, and is practically asking you to walk through it.

You Can Do It!

It’s important to note that all of this is far easier if you’re talking directly to the Seller, rather than through agents. But learning to find and connect directly with Sellers is not difficult…and it’s very worth your energy to learn! Just imagine how much faster and easier you could grow your portfolio if you didn’t have to play the banking game. Now, it's a brand new year--get out there and find some Seller Financing deals!