Is Seller Financing right for you?
It usually fits when:
- You own the house free and clear or with a small balance
- You don't need all the cash now and would like monthly income
- You're a landlord who's done managing tenants but wants the rental income to continue
- You'd rather spread the capital gain over several years (ask your tax advisor about installment-sale treatment)
How does it work?
- Talk through your goals. How much down, how much per month, for how long. We start from what you need.
- Term sheet. We send a written term sheet: price, down payment, interest rate, term, and any balloon date.
- Attorney-drafted documents. A Delaware attorney prepares the promissory note and a mortgage recorded against the property. Your attorney reviews them for you.
- Close with a settlement attorney. You receive the down payment at settlement. The deed and your mortgage are recorded.
- Get paid monthly. Payments come to you directly or through an independent loan servicer that tracks every payment and year-end tax statement.
What are the pros and cons?
Upside
- ✅ Higher total price than an all-cash offer
- ✅ Monthly income at an interest rate you agree to
- ✅ Your recorded mortgage secures the debt: if payments stop, you can foreclose
Trade-offs
- ⚠️ You don't get all your money at once
- ⚠️ You carry the risk of the buyer's performance
- ⚠️ If you still have a mortgage, the lender's due-on-sale clause must be addressed
What can the numbers look like?
Illustrative: On a free-and-clear house where a cash offer would be $200,000, seller financing might look like a $230,000 price with $20,000 down and the $210,000 balance at 6% amortized over 30 years (about $1,259/month), with the balance due in year 7. Actual terms depend on the house and what you want.
How are you protected?
- A recorded mortgage on the property in your favor (first position when the house is free and clear)
- Independent third-party loan servicing (optional)
- Insurance on the property naming you as mortgagee
- Your own attorney reviews every document before you sign
Not sure which option fits?
Tell us about the house. We'll lay out every option that works, side by side, with the numbers.
Get My Written Offer Call (302) 525-0787Frequently asked questions
What happens if you stop paying?
Your note is secured by a recorded mortgage, so you have the same right any lender has to foreclose and take the property back. The documents also spell out late fees and default terms.
What interest rate do I get?
It's negotiated. Sellers often choose rates competitive with CDs or bonds. Your tax advisor can confirm IRS minimum-rate rules.
Can I sell the note later?
Often yes. There's a market for privately held mortgage notes, usually at a discount.
How is this taxed?
Seller-financed sales may qualify for installment-sale treatment, which spreads the gain across the years you receive payments. Confirm with your CPA.
I still have a mortgage. Can I do this?
Possibly, as a "wrap" or combined with paying off your loan at closing, but your lender's due-on-sale clause matters. We'll lay out the options and you should review them with an attorney.
Do I need an attorney?
We strongly recommend your own.
General information, not legal, tax, or financial advice. Examples are illustrations, not offers. Consult your own attorney and tax advisor before selling.
