August 1, 2017
What is Seller Financing or Vendor Financing or Vendor Take Back?
Seller financing can take may forms but the easiest way to think about it is that the seller allows the buyer to defer the payment of a portion of the purchase price and the seller receives a monthly payment from the buyer to pay for that loan. The borrowed portion of the purchase price is either paid off or becomes due at some point in the future. The seller benefits because they can get monthly payment income from the buyer and it can make the home purchase more attractive to more buyers. In the case of a mortgage, the seller is secure with a mortgage registered again the property once they transfer title to the new owner. Land trusts, Lease Options and Agreements for Sale are other similar ideas.
Lease Options are generally better for us as they are cheap to set up, they trigger no transfer tax, and yet you still control the property. If the seller absolutely has to get off title, then a lease option will not work of course.