seller financing

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Seller financing

Funding a purchase by a seller's loan to the buyer, the buyer takes full title to the property when the loan is fully repaid.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Seller Financing

An agreement between a buyer and a seller of an asset, usually real estate, where the seller directly holds the debt. That is, rather than going through a financial intermediary such as a bank, the seller and the buyer conclude the transaction and the buyer makes payments on the asset at the agreed-upon rate of interest directly to the seller. This is useful for the buyer when he/she could not otherwise obtain financing. It can also be useful because the interest rate is often lower. Likewise, the seller can often receive a higher return on the sale of the house because he does not have to pay commissions or other costs to the financial intermediary.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

seller financing

The practice of a seller of real property holding some or all of the debt necessary to purchase the property. It is widely believed that seller financing is the last resort of borrowers who cannot obtain financing elsewhere,and the last resort of owners who cannot sell their property without offering it to buyers who cannot obtain financing.In reality,many property owners prefer to finance the sale of their properties,thereby earning a better rate of return on their money than if they obtained cash and then attempted to invest that cash in the marketplace.By the same token, many purchasers are able to secure somewhat cheaper mortgage loan interest rates than generally available in the marketplace if a seller will hold the financing.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.