How does seller financing really work? Would it be good for the buyer to do a transaction through seller financing?

Is it worth the trouble? For the buyer, absolutely. For the seller, not so much. For the seller, if the value of the property increases, it all belongs to the buyer, and all the seller gets is its loan payments. If the value of the property goes down, the buyer can walk away, and all the seller can do is take back the property. If the seller wants to avoid paying income tax on the profits by exchanging this property for a replacement property, the seller probably can't use your promissory note to buy the replacement poperty, unless the seller can find someone to buy the loan, usually at a substantial discount. It used to be that if the buyer was borrowing 70%-80% of the purchase price from a bank, and the buyer did not have the rest of the cash, the seller might take 10%-15% of the price as a loan secured by a second deed of trust on the property, behind the bank. After the last two real estate loan debacles, most home lenders want to see that the buyer has 20%-30% of the buyer's own cash invested in the home, as assureance that the buyer will take good care of the property and not stop making the loan payments, even if the value of the property goes down. Therefore, most lenders will not accept such partial seller financing. Hiding such seller financing from a federally insured lender is a felony. I suggest first pre-qualifying with a lender or a loan broker, so that you know how much you can borrow. Find out how much seller financing the lender will allow. IF the answer is none, keep asking lenders until you find one who will. Now you know what to tell your broker about how much you ca offer, how much will be the bank's cash, how much will be your cash, and who much you will need the seller to carry back as loan secured by a second deed of trust. If you appreciate this free advice, please remember to refer me to any friends or acquaintances who need a lawyer. Referrals are still our best source of new business. Do you have a revocable living trust to protect your heirs against probate? Probate takes forever, is expensive, and is annoying. Do your family a favor. Set up a trust, and put all your property, especially any real property, into the trust. Since it is revocable, you can change it, add to it, take property out of it, or even cancel it completely, at any time. We set up such trusts, provide a pour-over will as a back-up for any property that does not make it into the trust, provide you with blank durable powers of attorney for health care and financial decisions, in case you become incapable of making such decisions while still alive, and convey one piece of real property to the trust, usually the family home, for $1500.00. If you would like to hire me to do this, let me know, and I'll send you a list of the information I need. Dana Sack