Seller financing is a real estate or business transaction arrangement where the seller provides a loan directly to the buyer instead of the buyer obtaining financing through a traditional bank or financial institution. In this setup, the buyer makes a down payment to the seller and then repays the remaining balance in installments over an agreed period, often with interest, similar to a mortgage

. Key features of seller financing include:

• The seller acts as the lender, handling the mortgage process and negotiating terms directly with the buyer

• The loan is typically secured by the property or business being sold, so if the buyer defaults, the seller can repossess or foreclose on the asset

• Terms are flexible and negotiated between buyer and seller, including down payment size, interest rate, repayment schedule, and loan duration, which often ranges from 5 to 10 years and may include a balloon payment at the end

• It is beneficial for buyers who might not qualify for conventional loans due to poor credit or other issues, and it can help sellers attract buyers and potentially get a premium price

• Legal agreements such as promissory notes and purchase contracts are essential to protect both parties

Seller financing is also known as owner financing, purchase-money mortgage, or seller note, and while it can facilitate quicker sales and reduce red tape, it carries risks, especially for the seller, who assumes the risk of buyer default without the backing of a financial institution

. In summary, seller financing is a direct loan from seller to buyer that bypasses traditional lenders, providing flexible financing options but requiring careful legal documentation and risk management