Curious about Seller Financing Basics

[James Ciccarello]

Hello,

I am generally curious about what Seller Financing entails and what the process can look like.

If anyone could share the basics, any examples, or resources that would be great! 

[Benjamin Aaker]

Hi James,

With seller financing, the seller is acting like the bank. The first step is to talk to an attorney because you will likely use them to draw up the contract (at your expense). If the attorney isn't doing any negotiating for you, budget $1,000 for your first one.

The next step is to find a seller and talk with them directly, if you can. Going through an agent is OK but adds another layer of complexity. Only use an agent with experience in this area.

You'll next have to explain to the seller why their financing is a good thing for both of you. You'll need to be extremely knowledgeable on the subject before attempting. Check out Creative Cash by Bill Ham.

The seller then will then give you possession of the property for your promise to pay them in x monthly payments of y dollars or whatever you agree. In some cases, the seller also could finance your down payment and you use the bank for the rest. You'll have to have a good relationship with your bank to do this.

There's a lot more detail to this, like what happens if you miss a payment and how/when the seller can take back the property. Talk with the attorney. This post certainly won't make you an expert, but I hope it helps.