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Seller Carry/Seller Finance Sales

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A Seller Carry, also known as a Seller Finance Sale or Owner Financing, is a real estate transaction in which the seller of a property acts as the lender and provides financing to the buyer. In this arrangement, the buyer makes payments directly to the seller over time, instead of obtaining traditional financing from a bank or mortgage lender. The seller essentially “carries” the loan for the buyer, and the property title is transferred to the buyer, making them the owner of the property. Read on and contact Strata SFR to learn more about seller carry/seller finance sales and how working with our team can benefit you.

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Key features of a Seller Carry/Seller Finance Sale include:

  • Terms and Negotiation: The specific terms of the financing, including the interest rate, repayment period, and down payment, are negotiated between the seller and the buyer. These terms can be more flexible than those offered by conventional lenders, making it an attractive option for buyers who may not qualify for traditional bank loans.
  • Promissory Note and Mortgage/Deed of Trust: To formalize the seller financing arrangement, the parties sign a promissory note, which outlines the terms of the loan, such as the payment schedule, interest rate, and any late fees. Additionally, the seller may secure the loan with a mortgage or deed of trust, giving the seller a security interest in the property in case the buyer defaults on the payments.
  • Closing Process: The seller carry sale goes through a closing process similar to a traditional real estate transaction. The necessary legal and financial documents are prepared and signed, and the property title is transferred to the buyer.
  • Seller’s Risk: While seller financing can benefit the buyer, it also involves some risk for the seller. If the buyer defaults on the payments, the seller may need to go through foreclosure or take legal action to regain possession of the property.
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Advantages of Seller Carry/Seller Finance Sale for Buyers

  • Easier Qualification: Buyers with less-than-perfect credit or limited access to traditional financing may find it easier to qualify for seller financing.
  • Flexible Terms: Buyers and sellers have the flexibility to negotiate terms that meet both parties’ needs, potentially resulting in more favorable conditions for the buyer.
  • Avoiding Traditional Lenders: By avoiding traditional lenders, buyers may save on closing costs and other fees associated with mortgage loans.

Advantages of Seller Carry/Seller Finance Sale for Sellers

  • Attracting Buyers: Offering seller financing can attract a larger pool of potential buyers, especially in a slow or niche market where traditional financing may be difficult to obtain.
  • Passive Income: Sellers receive regular payments from the buyer, providing a steady source of income and potentially earning interest on the financed amount.
  • Faster Closing: Seller carry transactions may have a quicker closing process, as they are not subject to the strict underwriting processes of traditional lenders.
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It’s important for both buyers and sellers to conduct due diligence and seek professional advice when considering a Seller Carry/Seller Finance Sale. A real estate attorney and/or financial advisor can assist in drafting the necessary legal documents and ensuring that the transaction is structured appropriately for both parties’ protection.

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