What Is Seller Financing in Real Estate?

In seller financing (also called owner financing), the seller acts as the lender—allowing the buyer to purchase the property without a traditional bank mortgage. Instead of borrowing from a bank, the buyer makes payments directly to the seller under agreed-upon terms.

💡 How Seller Financing Works

  • The seller and buyer agree on the price, interest rate, and repayment schedule.
  • A promissory note and mortgage (or deed of trust) are recorded, just like a bank loan.
  • The buyer makes monthly payments directly to the seller, often with fewer qualification hurdles.
  • When the loan is paid off, the buyer receives clear title to the property.

📈 Advantages and Risks

  • ✅ Faster closings: No bank underwriting delays.
  • ✅ Flexible terms: Interest rate and down payment can be customized.
  • ✅ Great for FSBO sales: Sellers attract more buyers by offering financing.
  • ⚠️ Risk: If the buyer defaults, the seller may need to foreclose.

🏡 Seller Financing and FSBO Sellers

Offering seller financing can help FSBO sellers close deals faster and reach buyers who might not qualify for traditional loans. When listing your property on the MLS with Brokerless, you can include “Seller Financing Available” in your remarks to increase visibility and buyer interest.