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How to find seller financing deals

How to find Seller Financing Deals

Find seller financing deals quickly. Investing in real estate can be a big leap for some with low cash on hand, but seller financing can save you money. 

Ultimately, you want your money to work for you. A motivated home seller will consider this type of creative financing terms for the sale of their home or properties. Sellers typically have many reasons as to why they will finance the deal. These reasons may include assistance to avoid mortgage foreclosure, capital gains tax bills, or auction of their properties. It is important to understand the needs and wants of your seller when you propose a seller finance deal. If you are the seller it is important to talk to realtors, escrow account businesses, CPAs, title companies etc. to understand your roles and responsibilities as the loan holder. 

Although knowledge of the financing options, listing services, and deals available will be crucial in getting started, it ultimately comes down to the relationships built between buyer and seller. Gaining trust and establishing equitable terms in the home sale process cannot be understated or underestimated. Sellers must know that once you buy their real estate, the negotiated terms will stand, you will make the monthly payments and you will not default on your monthly payments. We will discuss how to find a seller financing for sf properties and multifamily real estate in the following blog. Don’t be afraid to stop and think during the process what would the other party feel comfortable with. Make sure to consider how as a buyer you would prove to a seller what your credit is worth and how you will organize your assets and portfolio to show the seller you are financially qualified to buy their property. 

What is a Seller Financing Deal?

Seller financing, also known as owner finance, is a real estate transaction where the seller acts as the lender and finances the buyer’s purchase. Instead of the buyer obtaining a traditional mortgage from a bank or other financial institution, the buyer makes payments to the seller over an agreed-upon time. Payments are typically with interest added to the principal which is standard for a loan. Make sure to use an amortization schedule to calculate the payment due dates. This is a great document to have both the seller and the buyer sign and add to the title paperwork. This paperwork signed, is acknowledgement of the terms of the loan. Also, adding paperwork to show bank account information or escrow information is a strong way to ensure all parties get information and it is noted in the title paperwork. Seller financing can be a viable option for buyers who may not qualify for a traditional mortgage, and it can be a way for sellers to sell their property more quickly and potentially receive a better return on their investment. 

Common Types Of Seller Finance Agreements

There are several common types of seller finance agreements, including:

  1. Land contract: A land contract, also known as a contract for deed, is an agreement in which the seller finances the purchase of the property and retains ownership until the buyer pays off the balance of the purchase price.
  2. Mortgage or Deed of Trust: In this type of agreement, the buyer signs a promissory note and a mortgage or deed of trust, which gives the seller a security interest in the property until the buyer pays off the loan. (this is most like a lender deal)
  3. Lease Option: A lease option allows the buyer to lease the property for a specified period with the option to buy it at a later date. The seller typically requires an upfront payment, called an option fee, which is credited toward the purchase price if the buyer exercises the option to buy.
  4. Wraparound mortgage: A wraparound mortgage is a type of financing where the seller provides a new mortgage to the buyer, which wraps around the existing mortgage on the property. The buyer makes payments to the seller, who in turn makes payments on the existing mortgage.

It’s important to note that the terms and conditions of each seller financing agreement can vary, and it’s essential for both parties to carefully review and understand the terms before entering into an agreement. The items to consider when it comes to the agreements would be, interest rates, down payments, balloon payments, and payoff penalties. 

What is a Seller Financing Deal

PROS and CONS of Owner Financing Deals

It’s important to carefully consider the pros and cons of owner financing before entering into an agreement, and to work with a trusted professional to ensure a fair and legally binding agreement is in place.

Trusted professionals include tax advisors, accounting professionals, title companies and real estate lawyers. These people know how to find and identify potential pitfalls in each sale. They are critical for buyers and will be able to share their professional view on rates, structure of contracts and terms, and ensure that your tax bill is as low as it can be for years to come. 

Pros of Financing by Owner

Seller financing is not suitable for every situation, it can offer a number of benefits to both buyers and sellers. Listed below are several benefits of financing by the seller. While a seller financing deal may not be visible to all buyers and investors, multiple listings may be available through a listing broker. 

  1. Easier to Qualify: Owner financing may be a viable option for buyers who may not qualify for traditional financing due to credit history, income, lack of down payment money or other factors. 2.
  2. Flexible Terms: The terms of the agreement can be negotiated between the buyer and seller, which can include interest rates, repayment schedules, and down payment amounts. 3.
  3. Faster Closing: Owner financing can often result in a faster closing process, as there may be fewer parties involved and less paperwork to process. 4.
  4. Higher Return: Sellers may be able to receive a higher return on their investment by financing the purchase of their property, as they can charge interest on the loan and avoid large tax implications upon closing of the sale. 

Cons of Owner Financing

While seller financing can offer several benefits to both buyers and sellers, it is not without drawbacks. Before considering seller financing as an option for your next deal, it is important to carefully weigh the potential cons. Seller financing can involve a higher degree of risk for both buyers and sellers compared to traditional financing methods. Below are some of the cons of seller financing that should be taken into consideration.

  1. Higher Interest Rates: Owner financing may come with higher interest rates than traditional financing, which can increase the overall cost of the property for the buyer. 
  2. Risk of Default: There is a risk that the buyer may default on the loan, which can result in the property being returned to the seller, and the seller would have to start the process of finding a new buyer. 
  3. Legal Complexity: Owner financing deals can be legally complex, and both parties may require legal representation to ensure the agreement is valid and enforceable. 
  4. Limited Pool of Properties: Not all sellers may be willing to offer owner financing, which can limit the pool of properties available to buyers who require this type of financing. 

How to Find Owner Financed Homes for Sale                                    

The key to finding a seller finance deal is to be proactive, flexible, and willing to do some extra legwork to find the right home with favorable financing terms. While finding seller financing deals may require some extra effort, there are indeed multiple ways to find such opportunities. Let’s go over some of these ways and where to start.

Finding Sellers via Real Estate listing websites 

Search for homes on real estate listing websites like Zillow, Redfin, or Realtor. com.

Use the search filters to narrow down your search to properties that offer owner financing. You can also narrow the search field by the size of the deal, amount of money, type of home, and listing service. Look for keywords such as “owner financing,” “seller financing,” “contract for deed,” or “lease option” in the property description. If there is no information provided about financing, you can reach out to the listing agent or home seller to inquire if owner financing is an option. Be sure to create a system for yourself to log your communications with sellers or potential buyers for future reference. 

Hire a Real Estate Agent

An experienced agent with in-depth knowledge of the local housing market may be able to find owner financed deals in the area. They may be aware of a motivated homeowner willing to sell their property and offer owner financing. In addition to identifying owner-financed homes, they can negotiate better interest rates and terms with the seller and assist you in completing the transaction. Remember relationships are important.

Check a Public MLS Website 

As a realtor, searching the MLS for owner finance deals can be a great way to find unique, creative solutions for buyers and sellers. To get started, log into your MLS account and use the search bar to look for listings that are “For Sale By Owner” or “Owner Financed”. You can also search for keywords such as “lease option” “contract for deed,” or “seller financing”. 

Locate For Sale By Owner (FSBO) Homes

A useful approach to locating homes available for purchase through owner financing is to drive around a desired neighborhood and look for “For Sale By Owner” signs. If a property captures your attention, you can reach out to the owner and inquire about the possibility of owner financing. This tactic proves more effective during a buyer’s market, where the seller has difficulty selling the property, and it has been on the market for an extended period. 

Common Types Of Seller Finance Agreements

Look for “For Rent” Signs

While “For Rent” signs may not directly indicate owner financing, they can be a good indicator that the property owner may be open to creative financing options. Rent-to-own or lease-to-own agreements can be a form of owner financing, where the buyer rents the property for a period of time with the option to purchase it at a later date.

Check Eviction Records

An effective approach to identifying landlords who may be interested in owner financing is by reaching out to those who have faced tenant-related challenges and the demanding eviction process. Accessing public eviction records at your local courthouse can help you locate such landlords. Once you have identified these property owners, you can initiate contact to inquire about their interest in selling their property through seller financing.

Check Buyers/Investors Network

Networking is an effective means of discovering homes available for purchase through owner financing. Attending local real estate investor meetups and other industry-related events provides an opportunity to meet motivated investors looking to sell their property. You can inquire if the property can be purchased through owner financing.

ADPI Pro Tips

  • Being flexible on the terms of the agreement, such as interest rates and repayment schedules, can increase the likelihood of securing seller financing. The greatest thing about owner financing is the flexibility it provides for both the buyer and seller. The terms of the agreement can be negotiated and customized to fit the needs of both parties, which can result in a more mutually beneficial arrangement. 
  • A tail of caution, it is wise to as a buyer and a seller get an appraisal done. It is not required in owner financing but it is important to ensure that the property will appraise in the case you want to resell it. 


Lorna Neeley

Lorna Neeley

Lorna brings a wealth of knowledge and experience to the real estate investing world. She has been an investor for 14 years, and in that time she has learned how to build successful teams and businesses. She is also a military member with years of service, so she knows how to be responsive under pressure and stay dedicated to a goal. Lorna loves learning new things, and this lifelong curiosity has helped her become a smart and successful business woman.
Lorna Neeley

Lorna Neeley

Lorna brings a wealth of knowledge and experience to the real estate investing world. She has been an investor for 14 years, and in that time she has learned how to build successful teams and businesses. She is also a military member with years of service, so she knows how to be responsive under pressure and stay dedicated to a goal. Lorna loves learning new things, and this lifelong curiosity has helped her become a smart and successful business woman.
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