How To Structure A Lucrative Seller Finance Deal

Question

Hi all,

My business partner and I listed our home in Vilano Beach, FL back on 4/13/2023. We are looking to offload the property and get into a different investment strategy. To do so, we need the equity out of our home. We are looking to add a seller finance option to the listing to attract more buyers. I don't have any experience structure deals on the seller side, so I was looking for some help on structuring a lucrative deal for the buyers.

Purchase Price: $670k

DP: 10%

Rate: 7.375%

Reno Cost: $50k

Total Equity in Home: $117k

Current list price: $764k - we are looking to pull as much of our equity out as possible to reinvest. How would you structure the deal to appeal to buyers? Higher list, lower rate or lower list, higher rate? Open to any and all suggestions.

Thanks,

Cory

Nicholas L. · Answer

seller finance is not a good way to get the equity out

in a seller finance deal, the less the seller can put down, the better

if you want the equity out, refi or sell

Chris Mury · Answer

Hey Cory,

Where is the extra equity coming from in this scenario? For example, say you sell the property for your $764k list price and seller finance your $117k equity to the buyer, there's a difference there of $647k. The buyer would need to bring $647k in cash or finance the $647k (and find a bank that's ok with a $117k second mortgage) to close the transaction.

As the previous poster said, seller finance deals typically occur with buyers who have high equity. This is probably a hard pill to swallow, but your home is likely overpriced if you've had it listed since April and it hasn't sold. I'd have a conversation with your agent to strategize on a list price that gets the house sold if you absolutely need to sell. Best of luck with the sale.

Chris

How To Structure A Lucrative Seller Finance Deal

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