--- title: "Seller Financing: Pros and Cons of Both Sides of the Deal" description: Seller financing — which is a loan from a seller to a buyer of a property to cover a portion of the purchasing price — is a win-win for all involved. image: https://blog.sdnyrealty.com/hubfs/ThinkstockPhotos-499469109.jpg --- - [Pay Rent](https://sdnyrealty.com/pay-rent/) - [Forms](https://sdnyrealty.com/forms/) -   [![S&D Commercial Real Estate Agency](https://blog.sdnyrealty.com/hs-fs/hubfs/S__D_Real_Estate_January2019/images/sd-original-logo_300px.png?width=300&height=194&name=sd-original-logo_300px.png "S&D Commercial Real Estate Agency")](https://sdnyrealty.com/) - [About](https://sdnyrealty.com/long-island-commercial-real-estate-firm/) - [Agents](https://sdnyrealty.com/long-island-real-estate-agents/) - [Listings](https://sdnyrealty.com/property-listings/) - [Property Management](https://sdnyrealty.com/property-management-company/) - [Resources](https://sdnyrealty.com/real-estate-resources/) - [Neighborhood Guide](https://sdnyrealty.com/neighborhood-guide/) - [Long Island](https://sdnyrealty.com/long-island-commercial-real-estate/) - [Nassau County](https://sdnyrealty.com/nassau-county-commercial-real-estate/) - [Bethpage](https://sdnyrealty.com/bethpage-commercial-real-estate/) - [Farmingdale](https://sdnyrealty.com/farmingdale-commercial-real-estate/) - [Franklin Square](https://sdnyrealty.com/franklin-square-commercial-real-estate/) - [Garden City](https://sdnyrealty.com/garden-city-commercial-real-estate/) - [Glen Cove](https://sdnyrealty.com/glen-cove-commercial-real-estate/) - [Hempstead](https://sdnyrealty.com/hempstead-commercial-real-estate/) - [Hicksville](https://sdnyrealty.com/hicksville-commercial-real-estate/) - [Long Beach](https://sdnyrealty.com/long-beach-commercial-real-estate/) - [Mineola](https://sdnyrealty.com/mineola-commercial-real-estate/) - [Rockville Centre](https://sdnyrealty.com/rockville-centre-commercial-real-estate/) - [Suffolk County](https://sdnyrealty.com/suffolk-county-commercial-real-estate/) - [Babylon](https://sdnyrealty.com/suffolk-county-commercial-real-estate/babylon-commercial-real-estate/) - [Brookhaven](https://sdnyrealty.com/brookhaven-commercial-real-estate/) - [Hauppauge](https://sdnyrealty.com/hauppauge-commercial-real-estate/) - [Huntington](https://sdnyrealty.com/huntington-commercial-real-estate/) - [Islip](https://sdnyrealty.com/islip-commercial-real-estate/) - [Melville](https://sdnyrealty.com/melville-commercial-real-estate/) - [Riverhead](https://sdnyrealty.com/riverhead-commercial-real-estate/) - [Smithtown](https://sdnyrealty.com/smithtown-commercial-real-estate/) - [Southampton](https://sdnyrealty.com/southampton-commercial-real-estate/) - [Consulting Services](https://sdnyrealty.com/consulting-services/) - [Property Appraisal Services](https://sdnyrealty.com/property-appraisal/) - [Zoning Regulations](https://sdnyrealty.com/zoning-regulations/) - [Forms](https://sdnyrealty.com/forms/) - [Veterans & Military Housing](https://sdnyrealty.com/veterans-military-housing/) - [Join our Program](https://sdnyrealty.com/veterans-military-housing/#apply-now) - [Forms & Applications](https://sdnyrealty.com/forms/) - [Pay Rent](https://sdnyrealty.com/pay-rent/) - [Blog](https://blog.sdnyrealty.com/blog) - [Contact](https://sdnyrealty.com/contact/) # Seller Financing: Pros and Cons of Both Sides of the Deal - October 28, 2015 - [Selling](https://blog.sdnyrealty.com/blog/topic/selling), [Tips](https://blog.sdnyrealty.com/blog/topic/tips) - 0 ![Seller Financing: Pros and Cons of Both Sides of the Deal](https://blog.sdnyrealty.com/hubfs/ThinkstockPhotos-499469109.jpg) Seller financing — which is a loan from a seller to a buyer of a property to cover a portion of the purchasing price — is a win-win for everyone involved.![](https://blog.sdnyrealty.com/hubfs/blog-image-uploads/blog-seller-financing-img-1.gif "Read more...") It can make a sellers’ [commercial](http://sdnyrealty.com/property-category/comm-properties/) or [residential](http://sdnyrealty.com/property-category/residential-properties/) property attractive to more buyers; it can help buyers with poor credit be able to close on a property; and it can speed the closing process. ## Seller Financing Quick Facts: - The owner may finance about 60 to 70 percent of the sales amount. - These type of loans are typically five to seven years long. A balloon payment is usually due at this time. - Interest rates between 7 and 9 percent are common. ## The Pros and Cons of Seller Financing ### Buyers #### Pros - You may be able to secure seller financing, even if you [have a limited budget](https://blog.sdnyrealty.com/blog/how-to-save-buying-commercial-property/) or have been turned down by a bank. - Faster, cheaper closing process because you don’t need bank approval. - There is no set amount for a down payment. #### Cons - The seller can set high interest rates for the loan. - Even though a bank is not involved, sellers are still allowed to run credit checks on their buyers. - You must be able to pay back the loan or run the risk of losing the property. ### ![seller financing](https://blog.sdnyrealty.com/hs-fs/hubfs/ThinkstockPhotos-470794593.jpg?width=594&name=ThinkstockPhotos-470794593.jpg "seller financing") ### Sellers #### Pros - [Seller financing](http://www.colettacommercial.com/the-pros-cons-of-seller-financing/) is attractive to buyers, too. - It is possible to sell the property “as is” without making repairs or upgrades. - With its high interest rate, the loan offers a great return on investment. - If the buyer defaults, you receive the property back, while keeping the down payment and any money already paid. #### Cons - Sellers usually need to have paid off their mortgage already to be eligible for seller financing. - The buyer could stop making payments without notice. - If the buyer defaults, you may need to go through the foreclosure process. - As a result of the financing, sellers often must deal with preparing complicated [tax returns](http://dmaccountingfirm.com/). [![Join The Commercial Courier](https://no-cache.hubspot.com/cta/default/432922/d68af3fc-de89-4dd0-bc71-e7dba2bb02f5.png)](https://cta-redirect.hubspot.com/cta/redirect/432922/d68af3fc-de89-4dd0-bc71-e7dba2bb02f5) ### Tags: - [Selling](https://blog.sdnyrealty.com/blog/topic/selling) - [Tips](https://blog.sdnyrealty.com/blog/topic/tips) ### [Previous post](https://blog.sdnyrealty.com/blog/millennial-home-buyers/) #### [5 Real Estate Tips for Millennial Home Buyers](https://blog.sdnyrealty.com/blog/millennial-home-buyers/) ### [Next post](https://blog.sdnyrealty.com/blog/nassau-county-business) #### [The Benefits of Opening a Nassau County Business](https://blog.sdnyrealty.com/blog/nassau-county-business) ### Related posts [![How a Home Appraisal Determines Residential Property Value](https://blog.sdnyrealty.com/hs-fs/hubfs/Blog_Images/Home%20Appraisal.jpg?width=768&name=Home%20Appraisal.jpg)](https://blog.sdnyrealty.com/blog/home-appraisal) - September 26, 2018 - [Buying](https://blog.sdnyrealty.com/blog/topic/buying), [residential real estate](https://blog.sdnyrealty.com/blog/topic/residential-real-estate), [Selling](https://blog.sdnyrealty.com/blog/topic/selling), [property value](https://blog.sdnyrealty.com/blog/topic/property-value), [Refinancing](https://blog.sdnyrealty.com/blog/topic/refinancing) ### How a Home Appraisal Determines Residential Property Value Appraising a property plays a significant role in the real estate industry. While appraisals are used for a wide variety of reasons, one thing is... [Continue reading](https://blog.sdnyrealty.com/blog/home-appraisal) [![Why Home Staging is the Key to Selling your House](https://blog.sdnyrealty.com/hs-fs/hubfs/Blog_Images/Home%20Staging.jpg?width=768&name=Home%20Staging.jpg)](https://blog.sdnyrealty.com/blog/home-staging) - June 27, 2018 - [residential real estate](https://blog.sdnyrealty.com/blog/topic/residential-real-estate), [Selling](https://blog.sdnyrealty.com/blog/topic/selling), [open house](https://blog.sdnyrealty.com/blog/topic/open-house) ### Why Home Staging is the Key to Selling your House No matter what, selling your home is always a tricky endeavor, especially when it comes to preparing for an open house. The goal of an open house is... [Continue reading](https://blog.sdnyrealty.com/blog/home-staging) [![How to Add Curb Appeal to Boost your Home’s Property Value](https://blog.sdnyrealty.com/hs-fs/hubfs/Blog_Images/Curb%20Appeal.jpg?width=768&name=Curb%20Appeal.jpg)](https://blog.sdnyrealty.com/blog/curb-appeal) - May 16, 2018 - [residential real estate](https://blog.sdnyrealty.com/blog/topic/residential-real-estate), [Selling](https://blog.sdnyrealty.com/blog/topic/selling), [property value](https://blog.sdnyrealty.com/blog/topic/property-value) ### How to Add Curb Appeal to Boost your Home’s Property Value If you’re in the market to sell a residential space, the goal is always to increase the property value of your home as much as possible. Luckily,... 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