Traditional financing isn’t always the right option when buying or selling homes. Seller financing agreements might be a better fit for some people. With seller financing, the seller acts as the lender so the buyer can purchase the home.
This post will cover the basics of seller financing agreements in real estate.
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With a seller financing agreement, the buyer does not get a loan from a traditional financial institution. The seller is the lender and, in most cases, the buyer receives no cash for the loan. Instead, they take possession of the property, and pay the agreed amount to the seller to settle the debt.
Seller financing agreements come in different forms. The choice of different deal structures depends on the needs and goals of the parties. These are a few of the typical deal structures for seller financing:
Seller financing can simplify the process. However, both sellers and buyers must consider the terms of the agreement. Depending on the deal structure, there may be various terms for seller financing.
This post covers some of what buyers and sellers need to know about seller financing. Stay tuned for part two to learn more.
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