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How to Find Seller Financing Deals in 2024

Here's how to find a seller financing deal for the right price.
Here’s how to find a seller financing deal for the right price.

Seller financing is a creative method of funding a real estate transaction where the seller agrees to finance the purchase of the home instead of a traditional lender. This arrangement can be advantageous for both parties – when executed the right way.

Although seller financed homes are hard to come by, they can be an effective strategy for building a real estate investment portfolio and generating wealth in real estate. Let’s talk about how to find seller financing deals and the best strategies for success this year.

What are Seller Financing Deals?

Let's talk about what seller financing deals are and why they can be a great way to start an investing portfolio.

Also known as owner financing or a seller carryback, a seller financing deal effectively replaces the mortgage company with the original homeowner. The new buyer makes regular payments to the owner at agreed-upon terms negotiated before closing. This includes crucial details like the down payment, interest rate, repayment schedule, and closing timeline.

Seller financing is an effective financing option for borrowers with poor credit or income qualifications because they wouldn’t be able to obtain a traditional mortgage otherwise. On the other hand, savvy real estate investors use seller financing to build investment portfolios with more advantageous terms and loan details. 

Pros of Seller Financing Deals

There's plenty of reasons to pursue seller financing deals this year.
There’s plenty of reasons to pursue seller financing deals this year.

Seller financing deals can be beneficial to both the buyer and seller for various reasons, including:

  • Attracting More Buyers: A seller financing home can attract more potential buyers that otherwise may not qualify for a traditional mortgage. This means that attracting more buyers can lead to more offers and a higher sale price for the home. 
  • Faster Closing Timeline: With seller financing, buyers can bypass the mortgage application process and avoid standard paperwork that delays the closing timeline. Less paperwork and lower criteria for approval means seller financing deals can close much quicker than traditional real estate transactions.
  • Flexible Loan Terms: Loan terms like the down payment, interest rate, and repayment period are often negotiated in a seller financing deal between the buyer and seller. This flexibility with loan terms can make seller financing more attractive for both parties and may not be possible with a bank or mortgage lender.
  • Reduced Closing Costs: Buyers pursuing seller financing can save on the traditional closing costs that come with a mortgage. Closing cost items like loan origination fees, appraisal costs, and application fees may be reduced or eliminated with seller financing. 

Cons of Seller Financing Deals

Watch out for the downsides of seller financing before getting started.
Watch out for the downsides of seller financing before getting started.

On the other hand, seller financing comes with potential drawbacks for both buyers and sellers in today’s market. Regardless of whether you’re an investor or casual homebuyer, it’s important to consider these downsides before closing your next seller financing deal.

Higher Interest Rates

While buyers can negotiate key terms in a seller financing deal, important loan details like the interest rate may be higher than a traditional mortgage. 

Sellers often compensate for the increased risk of seller financing with a higher interest rate, which in turn increases loan costs and monthly payments for the buyer.

» RELATED: Obtaining a Good Seller Financing Rate

Balloon Payments

Some seller financing deals include balloon payments that can be catastrophic for borrowers. A balloon payment is a lump sum payment that’s due in full at the end of the repayment period, typically within one to five years. 

Buyers of seller financing deals must be prepared for the balloon payment or make sure they’ll be able to refinance the loan before the balloon payment comes due. Otherwise, they could risk defaulting on the property and face severe financial consequences.

Opportunity Cost

Buyers pursuing seller financing deals may miss out on other profitable investments with better loan terms. This opportunity cost can be detrimental to the prospect of building a highly successful real estate investing business. 

Limited Buyer Protection

Traditional real estate transactions offer both the buyer and seller protections in case of disputes or legal issues during the repayment period. 

However, seller financing deals typically offer fewer protections and leave buyers and sellers open to legal risks that could harm them financially. 

How to Find Seller Financing Deals

Finding seller financing deals isn't difficult with the right strategy.
Finding seller financing deals isn’t difficult with the right strategy.

Now that you understand the benefits and drawbacks of seller financing, it’s time to talk about how to find seller financing deals and how to build a successful real estate business using seller financing. 

Online Real Estate Listings

The first way we recommend finding seller financing deals is through online real estate listings websites like Realtor.com and Zillow. These sites allow users to search through listings based on price point and financing terms. Use the filter feature to select options that say “seller financing” or “owner financing”. 

Next, browse the property listings on the website that meet your search criteria and could be a good fit for your investment. Make sure to pay attention to the details in the listing description, including the down payment requirements, interest rate, repayment terms, and other special conditions set by the seller.

Now it’s time to reach out to property owners and listing agents through the site. Ask them any additional questions you have about the seller financing terms or the property to find out if this is the right investment for you. If you decide it’s the right fit, it’s time to negotiate the terms with the seller and start the closing process.

Real Estate Property Software

Real estate property software programs offer advanced property information and additional details for properties listed both on and off the MLS. Software programs like Propwire are free to use and have advanced filters to find motivated off market sellers and in-depth information about the property not publicly available. 

Unlike Realtor.com and Zillow, advanced real estate property software also allows you to perform market research to analyze local and regional trends in your area. You’ll be able to see where seller financing deals are most prevalent and target those neighborhoods for the best chance at securing a profitable deal.

» MORE: Propwire Software Review

Work with a Wholesaler

Real estate wholesalers are professionals who specialize in locating properties below market value then assigning the contracts to investors. Working with a real estate wholesaler can be an effective way to find seller financing deals for several reasons:

  • Access to Off Market Deals: Wholesalers are often well-connected and have access to off market or distressed properties not listed on traditional real estate platforms. These types of properties may have greater opportunity for seller financing if property owners are open to alternative financing options.
  • Expert Negotiations: Real estate wholesalers are skilled negotiators who know how to secure properties under market value. They have the skills to negotiate with sellers to obtain favorable financing terms if you decide to work with them.
  • Market Knowledge: Savvy wholesalers have extensive knowledge of their local market and current dynamics in the industry. They can leverage their market knowledge to identify properties with seller financing potential and present them to buyers interested in alternative financing. 

Real estate wholesalers are extremely useful in the real estate industry and serve a vital role. However, working with a real estate wholesaler to find seller financing deals isn’t always right for everyone. 

Keep in mind that real estate wholesalers may mark up the properties in order to make a profit, and you may have a limited inventory of properties when searching in your local market with a wholesaler. 

» MORE: Best Markets to Wholesale Real Estate

Locate FSBO Homes

Homes that are for sale by owner (FSBO) bypass the traditional listing and sale process that come with real estate agents. This means that targeting FSBO listings can be another great strategy to find seller financing deals in your area. 

Many FSBO sellers are highly motivated to sell their properties quickly and would potentially be open to talking about alternative financing options like seller financing. Additionally, buyers can negotiate directly with the FSBO seller since there’s no real estate agent involved in the sale.

To find FSBO homes, check local newspapers and online classified ads listing off market homes for sale. Also tap into FSBO listing sites to see if there are any properties that meet your criteria in your area. 

» RELATED: Learn More About Off Market Homes

Hire a Real Estate Agent

Believe it or not, but real estate agents can be a great source of locating seller financing deals. While you have to pay high commission fees and closing costs, working with a real estate agent can open the door to high-quality properties and professional representation for negotiations. 

We recommend tapping into your personal network to connect with an agent in your area. Meet with them and tell them exactly what you’re looking for in terms of price point and your investment goals. From there, your real estate agent should start showing you properties where the seller may be open to discussing seller financing. 

Final Thoughts

Did you want to learn how to find seller financing deals? This article aimed to explore the pros, cons, and best strategies for securing seller financing deals this year so you can build a profitable investment portfolio.

By using these strategies, you’ll be able to locate properties with the highest chance of seller financing opportunities. Remember to do your due diligence and perform market research to make sure you get the best deal for your money.

Related: Securing the Best Seller Financing Interest Rate

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