Asking seller to be the lender

5 Replies

Hello everyone,

Has anyone everyone requested and negotiated with a seller to be the lender? I've heard of this before but would like to understand the approach if it's even viable. What are the steps you took? And did you end up doing a cash-out refinance to pay off the seller in order to own the property outright and have a fixed mortgage?


I'm working on a deal right now where a house that is on the market has very motivated sellers but little interest by buyers.  It is in a good neighborhood but the house has an odd set up making it difficult for them to sell.  First step was running the numbers.  I made sure that the price that I was going to offer (close to their asking) would be able to work as a rental.  Next, I made them an offer that lined out my terms such as the price I was willing to pay, the amortization schedule term, interest I was willing to pay, and I also promised a full bank refinance within the first 5 years.  I stayed close to their asking price but also asked for certain repairs to be made before purchasing (saving myself an initial $5k just in repairs).  Basically, if you can give them what they need, they'll be more willing to work with you on the terms.  I may be paying a little more than I generally would on a rental house but if they're carrying the loan for me (with zero down as well) then I'm avoiding the hassle of the bank initially.  By lining out my specific term, they know that I'm serious.

@Thomas Smith undefined

Thank you so much for sharing your story. I am currently eyeing a multifamily property with great income and low expense. Owner has owned the property for 30 years and is ready to retire and move to mississippi. How would you describe your terms of agreement and how did you come up with the interest rate that you feel comfortable with?

What I did was lined it out as if they were the bank.  I offered them 5% interest rate over 20 year amortization schedule.  The 5% is just slightly above what I'd get at a bank.  Now, this may only work because they're not investors themselves so they don't quite understand returns like investors do.  An investor may want a higher return for carrying a loan on a property.  Plus I'm getting away with zero downpayment which I would not expect to be the norm.  

Have you asked them is they're willing to consider an owner finance situation yet?  If they aren't, you're probably best to move on the the next deal.  

@Thomas Smith

How did you get away with no downpayment? Also, at some point the owner is going to want to get paid the whole amount - did you elect to do a cash out refinance to satisfy this requirement?

I spoke to the Seller's agent and he is going to speak to the owner. I hope to hear back from him soon. What he did request from us is to lay out our terms. If our terms is great then he "might" consider seller financing.

The zero down payment is happening because of their need to sell. Instead of a downpayment, I convinced them to allow me to use those funds to make improvements to the house.  That is rare and I’m still surprised they’re willing to go for it. I’d generally expect to see someone wanting at the least about 10% as a downpayment but that’s all based on the seller.  I did promise to refinance through a bank and buy them out within 5 years.  At this time I will be able to do a cash out refinance so I’ll make money for little out of pocket investment.