Real estate is believed to be the most lucrative and safest in terms of getting a great return on your investment. But there are false accusations floating around that hold people back from investing in properties or have people try to sell their property the traditional way. When it comes to seller financing misconceptions, 3 have been mentioned the most.  In this post, we will discuss myths and the benefits of selling real estate through this strategy.  Let’s first explain Seller Financing.

What is seller financing? Seller has a means to sell a property no longer wanted creatively to a buyer. It is a written contract between a seller who has sold their property and a buyer who has purchased the property under a predetermined agreement.  There are many terms used for seller financing with is also called creative financing: land contracts, trust deeds, contracts for deeds, deeds of trust, privately held mortgages. Sellers will advertise using phrases like: Seller or Owner Will Carry, Seller or Owner Financing Available, Purchase without a bank, No bank loan needed, etc.

Misconception #1: Rent-To-Own

Seller financing is not Rent-To-Own, also called Lease Option, by any means.  There are some horror stories that can be told about renting real estate to tenants.  The seller financing misconception is landlord responsibilities.  The fact/correction is the property being sold is being purchased, not rented.  The buyer is purchasing the property under terms and the seller is basically being the bank extending a mortgage.  There is no middle of the night maintenance calls, leaky faucets, broken toilets, tenants holding your rent hostage because of repairs not being completed, or whatever a “tenant” would complain about.  The property is being sold as-is and the “buyer” is responsible for the problems that arise in the property.  There are no landlord/tenant issues for you to worry about.

Misconception #2: Need to Hold Note Full Term

When extending financing to a buyer, the seller has created a note which has valuable equity built-in.  Many sellers don’t know that the mortgage note can be sold to an investor.  This seller financing misconception is missed by dozens of home sellers or investors.  Because this is a privately held note, the contract between the seller and the buyer can be sold for cash.  The seller has the option to sell whole or a portion of the note. 

The seller must make sure that the balance owed on the property, if any, does not exceed the value of the property.  

Seller Financing Benefits

There are dozens of benefits associated with offering real estate financing to a buyer. All it takes is for the seller to look past the negative gossip and learn the facts surrounding seller financing.  The seller can reap the following benefits:

  • a faster closing process,
  • lower closing costs,
  • flexible down payment,
  • keep title to home until buyer pays in full,
  • can sell as-is,
  • down payment for another property,
  • stand out from other properties to get property sold faster,
  • tax depreciation, and more. 

There are so many benefits that outweigh the negative/cons of doing seller financing which are the buyer may default and repair costs after the defaulted buyer leaves.  When the seller defaults, it doesn’t leave you in a bad position because the seller has put down a large non-refundable down payment, they have paid you a certain amount of money every month, you still are in control of the property, you can re-do this process with another buyer. This means getting another large deposit, more monthly income, and still no maintenance issues or complaints.  If you would like to learn more download our free guide.


To learn more about seller financing, please download our free report “Selling Your Home, A Better Way!” by clicking here.

We hope that this post helped to shed some light on some of the seller financing misconceptions that will allow you to invest in a strategy which can ultimately save you time and give you the freedom you deserve.