Financing
What Is Seller Financing?
Seller financing is when the seller acts as a lender, carrying a note for part of the price instead of taking all cash at closing.
A seller carry can sit behind a bank loan (a second lien) or be the only financing on the deal. It is powerful when the price will not move: a below-market carry rate, or a note in second position, can lift your cash-on-cash return at the same headline price. Related structures include subject-to, wraps, and master leases with option.
When terms are on the table, structuring beats haggling on price. See making the offer with an LOI.
See it on a real deal
RVP Underwriter computes this from your documents automatically, with every figure shown and sourced. Underwrite a deal free.
Questions
Why would a seller finance the sale?
To sell faster, command a higher price, spread capital gains over time, or earn interest on the note. It is common with retiring owner-operators of parks who own the property free and clear.
Related terms
Part of the RVP Underwriter glossary of income-property underwriting terms. Browse all definitions, or put them to work with the free calculators.