Is seller financing dead… or just hiding?

Question

I’ve been diving into creative financing strategies and seller financing keeps popping up—but every time I try to pursue a deal, it seems to go nowhere.

Is it still a viable strategy in today’s market? If so, where are the motivated sellers open to it hiding?

Would love to hear from anyone actively doing these deals—how are you finding them, and what’s working for you right now?

Kendall Brutus · Answer

Absolutely love this mindset—persistence and timing are everything with seller financing. It’s amazing how many doors open when you approach sellers with a real solution instead of just an offer. Totally agree that it’s not always about the rate or ROI on paper—sometimes it’s about peace of mind, tax strategy, or just simplifying their life. And you’re right, those off-market conversations are where the magic happens. You’re not competing with 20 offers, just building a relationship and solving a problem. Thanks for sharing your experience—it’s a great reminder to keep planting seeds and stay ready for when the timing lines up.

Christine Mulkins · Answer

Don't ever give up on finding a seller financing deal. My husband and I have purchased 3 buildings (all from the same guy) with seller financing. It was an off market deal. We reached out to him and kept the discussion going until the time was right for him. The beauty about seller financing is you work out the details with the seller for what works best for everyone involved based on a number of factors such as: whether they owe anything on the property, what monthly cash amount they want, for how long, etc. It's not always about a % return necessarily. Some sellers just want out of their rental property for various reasons but they don't want to get hit with a huge capital gains tax, so seller financing is the best option for them. My philosophy is that you never know without asking.

Chris Seveney · Answer

Less than 1% of all transactions are seller financing - its similar to thinking your kid is going to be a professional athlete... Yes you can find deals with seller financing but I can find plenty of deals without seller financing so I dont want to deal with the headache.

Bill B. · Answer

I did one in January. 25% down ($150k/$580k purchase), 7% interest with a balloon in 5 years, (shortest allowed by Dodd-frank). The problem is you’re competing with 5% guaranteed, pull your money at anytime offers from a bank. You’ve got a couple hurdles. You have to put 15-20% down or your seller will be upside down after paying closing costs if they have to exposes. If your seller is buying something else they’ll have to borrow every dollar you don’t give them at closing so you’ll have to pay a couple percent over their borrowing costs.

It was an easy world when the banks were offering 0.1-1% and you offered 5% (4-5% better than the banks.) Now the bank is offer 5% and buyers want to offer 7-8% instead of 9-10%. So their offer is much less attractive.

I think it’s just reverted to the world it inhabited for the 50+ years before 2010. Buyers with bad/no credit, high debt, or off the books income.

Kendall Brutus · Answer

Totally get where you’re coming from—and you're right that seller financing is a small slice of the market overall. It's definitely not for everyone, and it can be a headache if you’re chasing every deal hoping it’ll magically convert.

That said, I think seller financing isn’t about replacing all other strategies—it’s about adding another tool to your belt. For investors with little capital, or for deals that don’t work with traditional lending, it can unlock opportunities that others walk away from.

Kind of like niche marketing—less volume, but sometimes higher margins or less competition.

Appreciate the honest take though. Always helpful to hear both sides. Curious: have you done any seller finance deals in the past and sworn them off, or just found more success going the traditional route?

Christine Mulkins · Answer

@Kendall Brutus right on!! Keep on hunting for a good seller-financing deal! I'm sure you'll find something soon with continued persistence and the right attitude :)

Kendall Brutus · Answer

Thanks for laying that out—it’s a solid snapshot of where the market is right now. You're spot-on about the shift in the value proposition. When banks were offering near-zero yields, private financing at 5% looked like a win-win. But now that treasuries and CDs are reliably offering 5%+ with full liquidity and no risk, private sellers or investors have to stretch to 7–9% just to stay competitive, which makes the numbers a lot tighter.

And yeah, the Dodd-Frank constraints (like the 5-year balloon minimum) limit flexibility for owner-finance deals. Plus, if you're working with a seller who’s not sitting on a lot of equity, it’s easy for closing costs and commissions to wipe out their proceeds unless the buyer brings 15–20% down.

The other big factor you mentioned—borrowers with unconventional profiles—is becoming the main pool again for seller-finance or sub2 deals. It’s less about beating bank rates now and more about serving people the banks won’t touch.

Feels like we're back to the fundamentals: deals work when there's a true problem to solve or a buyer who needs a creative structure. Otherwise, the capital will just chase the safer yield.

Dan Hawtree · Answer

@Kendall Brutus Yeah, I don't get his comments either. seller financing is an option, not a gun against your head.

Is seller financing dead… or just hiding?

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