Seller Financing: Tips for Home Sellers


Seller financing has long been a viable strategy for home sellers who prefer monthly cash flow to a lump sum payment on the sale of their home. Yet some sellers are uncomfortable with the idea of carrying a mortgage for the buyer. Here are some suggestions that can increase the seller's comfort level:

 ·         Require a large down payment, maybe even as much as 25 percent, from the buyer. 

 ·         Review the buyer's credit history before sealing the  deal. 

 ·         Include a provision in the loan agreement requiring the buyer to reimburse the seller for  

       any collection-related attorney's fees. 

·         Include a late-payment penalty in the loan agreement.

·         Include a prepayment penalty in the loan agreement.


The worst-case scenario would be for the buyer to default on the seller financing. If that happens, the seller can foreclose on the home and resell it to another buyer.


Source: "Pros and Cons from a Seller's Perspective,"