Taking out a mortgage from the seller is one of the most popular creative financing strategies. However, seller financing does have some serious drawbacks. One of the most important things to consider is that searching for these types of deals will dramatically decrease the number of properties available to you.

WalletPop explains:

“Only sellers in strong financial positions will be able to offer you a loan to buy their homes. People who need cash now won’t be able to work with you on financing, and that eliminates short sales, foreclosures and otherwise distressed home owners from the mix. Families who are “trading up” to bigger homes also won’t be able to help because they need the cash for their new place. Eliminating all those categories of people eliminates a huge chunk of the available housing stock — and especially eliminates the distressed sellers who will offer the best bargains.”

On the other hand: if you don’t qualify for a traditional loan, seller financing increases the number of properties you can consider from zero to hundreds (or even thousands). It’s clearly not for everyone, but many potential homeowners with poor credit histories, self-employment records, or other issues have benefited from seller financing opportunities.

See Also:

Seller Financing Guide

Answers to Common Seller Financing Questions

Tags | creative financing, Seller Financing