Ins and Outs of Seller financing

New to Real Estate · OR · Member since 2025 · 67 posts · 24 votes

Hello,

I am interested in learning about seller financing. I am curious what I need to make my first deal. Do I need a broker to do the paper work? Do I need a real estate agent to negotiate terms? Do I need a lawyer to look over the contract?

What can the terms be? What is a reasonable interest rate? Should I have an exit strategy? Are there tax advantages? What are the pros/cons?

Samantha

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Matthew Bernal

Investor · Austin, TX · Member since 2021 · 497 posts · 127 votes

6mo

Samantha, seller financing is essentially the seller acting as the bank — you make payments directly to them instead of a traditional lender, with terms negotiated between buyer and seller.

You typically need a real estate attorney to draft the promissory note and deed of trust which is non-negotiable. An agent or broker is optional depending on how the deal is found. Terms are flexible rate, amortization, balloon payment, and down payment are all negotiable. Rates often run 6-10% depending on market conditions and the seller's motivation.

Are you looking at seller financing for a rental property or a fix and flip situation?

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Ken M.
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
6mo
Quote from @Samantha Chacon-Johnson:

Hello,

I am interested in learning about seller financing. I am curious what I need to make my first deal. Do I need a broker to do the paper work? Do I need a real estate agent to negotiate terms? Do I need a lawyer to look over the contract?

What can the terms be? What is a reasonable interest rate? Should I have an exit strategy? Are there tax advantages? What are the pros/cons?

Samantha

.
That of course is what I train people on among other techniques and what I've found over the years

1. You need to understand the technique first so that you don't do anything "stupid"
2. You don't need a broker or agent
3. You do need to know "the rules of the road"

4. Your exit strategy can vary depending on the deal
5. It's more important to know how to source deals, than pretty much anything else.
6. You need some money, the amount depends on the techniques.
7. You need to know how to handle the property, taxes, insurance, liability, payments and so on, once you are in ownership.

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Matthew Bernal
Investor · Austin, TX · Member since 2021 · 497 posts · 127 votes
6mo
Samantha, seller financing is essentially the seller acting as the bank — you make payments directly to them instead of a traditional lender, with terms negotiated between buyer and seller.
You typically need a real estate attorney to draft the promissory note and deed of trust which is non-negotiable. An agent or broker is optional depending on how the deal is found. Terms are flexible rate, amortization, balloon payment, and down payment are all negotiable. Rates often run 6-10% depending on market conditions and the seller's motivation.
Are you looking at seller financing for a rental property or a fix and flip situation?
1 Reply
- Samantha Chacon-Johnson
  OP
  New to Real Estate · OR · Member since 2025 · 67 posts · 24 votes
  6mo
  @Matthew Bernal Thank you that was helpful. I am going to look at a property today for a buy as a buy & hold. I am interested in a seller financing as they own the property outright.
  0 Reply
Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
6mo
@Samantha Chacon-Johnson
if you can, I'd go out for coffee or something equivalent with the seller. seller finance typically means you're going to be in at least a medium term relationship with them, or even longer, depending on the loan terms.
i have done a few successfully as a buyer - happy to talk through with you.
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- Jay HinrichsBusiness Member
  Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
  6mo
  Quote from @Nicholas L.:
  
  @Samantha Chacon-Johnson
  if you can, I'd go out for coffee or something equivalent with the seller. seller finance typically means you're going to be in at least a medium term relationship with them, or even longer, depending on the loan terms.
  i have done a few successfully as a buyer - happy to talk through with you.
  
  seller financing is a great tool. And especially in Oregon where many sellers are Oregon Nice they are more interested in you personally as a good person etc.. I spent decade buying timber land from Old school Oregonians and it was for sure relationship based.. We did a ton of porch time with them.. We bought Timber rights ( Timber deed) and the land and timber much of it owner financed.. And I sold logged over timber land on contract to buyers after we were done with our logging operation.
  
  IN Oregon specifically the Title company will prep the deed transferring title but they will want you or an attorney to write the note. We did it all in house in our transactions. Deeds are dead simple you just ask the Title company for a Trio a Trio is a copy of the last deed recorded and tax page from the county and a map.. U use the legal description in the last deed recorded and then you also know how they took title so use that as your title for the sellers.
  
  Lastly if the sellers are Elderly make sure they retain their own attorney.. many sellers in ORegon are elderly so careful to not get caught up in an elder abuse situation. And if title company is closing it and they sniff elder situation they will demand it as well.
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Richard Miller
Real Estate Agent · Tacoma, WA · Member since 2019 · 53 posts · 20 votes
6mo
@Nicholas L. Hey Nicholas, would you mine if I were to reach out to you on seller finance? I have some questions as well on how to structure the deals.
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