Selling a Home: Offering Seller Financing Pros & Cons

Should you offer seller-financing to your buyer? Pros and cons of this unusual financing choice.

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Selling a Home: Offering Seller Financing Pros & Cons

Posted by Gary Ashton RE/MAX Advantage on Thursday, July 28th, 2016 at 5:19pm.

Seller Financing Pros & Cons When selling a home, financing is usually something that is entirely the buyer's responsibility. The seller collects a check or receives a wire after the loan goes through and all the fees are paid. However, adventurous sellers who are open to alternative finance options may wish to explore seller-financing.

What is seller financing and how does it work? If you have a strong buyer who nonetheless does not have access to traditional financing, there can be distinct advantages to financing them yourself. You just need to be sure that you can, or want to, deal with the potential drawbacks of this unusual finance option.

Here we highlight some of the potential pros and cons of offering seller-financing.

Please note the below is for informational purposes only, and is not intended to serve as legal or financial advice. Always consult with real estate, financial & legal experts.

Higher Effective Sales Price

PRO: Your sales price is effectively higher when you offer to seller-finance, as you'll get not just the purchase price of your home but also the interest that the buyer pays over the life of the loan. Most sellers collect a down payment right away, often equal to about 20% of the selling price. They'll also collect a healthy interest rate on their money for the term of the loan.

Wider Array of Buyers

PRO: Regardless of the market conditions, seller-financing can help attract a wider array of buyers who may not qualify for or feel comfortable with a traditional mortgage. There may may also be a opportunity to work with otherwise highly-qualified self-employed individuals who may not have the precise documentation required in order to qualify for a fully underwritten bank loan.

Quicker Sale of a Difficult Property

PRO: Do you need your property to sell quicker? Every month that your home doesn't sell, you have to pay for insurance, utilities and other services associated with the house. This can significantly cut into earnings from the sale. Plus, if you are making mortgage payments on two homes at once, this can cause a significant strain on household finances. If your home is not moving as quickly as you'd like, putting seller-financing on the table might raise additional interest from buyers.

Chance to Offer Incentives Few Sellers Will

PRO: You are offering an incentive that few sellers do. Only about one in 10 houses on the market offer seller-financing. If you are willing to do this for a buyer, you put your home into a very exclusive club. This perk can give you the chance to sell for a higher amount than might otherwise be possible. On the other hand, offering to finance a sale on your own also has a few possible drawbacks to consider.

Are You in a Position to Offer Seller-Financing?

CON: Can you realistically offer seller financing? How does seller financing work? In most cases, this is only on the table for people who have 100% ownership of their home. Most mortgages have due-on-sale clauses. If you still owe on your mortgage, you will most likely have to pay off the balance as soon as you sell. Since most people do not have the funds on-hand to do that, it usually comes out of the proceeds when they sell their home.

Questions about seller financing? Always consult with an attorney and financial advisor before offering to buyers.

Some sellers get around this by keeping the home in their name and continuing to make payments on the mortgage out of the payments received from the new owner. However, this arrangement can lead to a lot of pressure. If the buyer stops paying, will the seller be able to pay the current mortgage? If not, they could end-up with a foreclosure years after the home was sold. Remember to always consult with an attorney!

Will You Do the Due Diligence a Lender Would?

CON: If you wish to seller-finance, you should perform due diligence of the prospective buyers the same way a bank would. Ideally, a seller who plans to finance will require a loan application and income approval. If doing this seems overwhelming, you run a significant risk of losing money or seeing damage to your property.

Can You Earn a Better Return Elsewhere?

Seller Financing Return on InvestmentCON: Are there better options for a return elsewhere? Collecting the interest on a 15- or 30-year loan on your home can put more money in your hands than taking the sales proceeds all at once. Seller-financed loans often earn twice what traditional mortgages do.

Presently, experts put the average at 7 to 10%. However, you may be able to get a better return on your money by investing in another property for a quick profit, or putting money into stocks or other traditional investments. Examine all options before tying up such a large portion of your assets in a single investment.

Will the Buyers be Reliable?

CON: Offering contract for deed homes requires that you trust the buyers to be reliable. It is true that you can find more and different types of buyers by offering to finance yourself. However, it's important to keep in mind that when you take on buyers who may have already been rejected by banks, that you open yourself up to a level of risk the banks considered unacceptable.

Can You Wait to Receive Full Market Value of the Home?

CON: You must be prepared to wait on receiving the sales price of your home. Some seller-financing arrangements call for a traditional 15- or 30-year mortgage. Many more involve a 30-year amortization with a balloon payment due at five years. By structuring it this way, you can get the balance owed when the buyer refinances. However, even five years can be a long time to have the profits from your home tied up. If you will need the money sooner, say for retirement or college tuition, seller-financing may not be a good fit for you.

Bottom Line: Each home and each seller is unique. What works well for one seller may not for you. By considering all of the potential pros and cons of seller-financing, you can decide what's best for you and your family. #hw


There probably isn't a single Nashville luxury home seller who wouldn't want to sell their house for as much money as possible. As tempting as it may be to drive the asking price upwards to increase the profits made, overpricing usually makes it more difficult to sell any dwelling, especially considering how most homebuyers either work with agents, or are educated enough to know when someone is trying to screw them over.

Folks who've tried selling their houses before will most likely have heard of the term "fair market value," which is basically the highest amount an educated buyer is willing to pay. Unlike asking price, the fair market value is derived utilizing several factors to achieve a total that's somewhat favorable for both the buyer and seller.

Real estate agents in Nashville like to conduct thorough market analysis for determining an estimated value in which their clients may dispose dwellings. However, these projected figures tend to fluctuate depending on the local housing market, as well as the prices of similar homes within the same area..

While there are numerous factors which could help the seller bag a better deal, it's important to not raise the asking price irrationally. Here are some points that prompt people to raise their asking prices unreasonably high:

First and foremost is certain upgrades given to the residence – while adding certain infrastructural upgrades to the residence will help any homebuyer regain a good portion of their investment, these aren't good enough to retain it 100 percent. Moreover, the more personalized a certain upgrade may be (e.g. imported ceiling fan, black flooring, etc.), the less valuable it becomes in the eyes of potential buyers.

Second would be instances where sellers pay too much for the original dwelling – sometimes first-time homebuyers don't know they've been ripped off until they meet a reputable realtor. Driving the price up higher in an attempt to recover the investment at the expense of sellers doesn't warrant the action, and will most of the time be counterproductive.

As for the third and last factor, we have scenarios where inexperienced Nashville sellers jack up their asking price to afford a new residence at a higher-priced community. Anyone moving to a more prominent society would easily be tempted to dispose his original abode at a higher cost to help financially shoulder the move. While it's a normal practice, some sellers tend to get a little carried away and increase their asking prices even higher, thereby hindering their ability to make a sale.


Nashville Home SellersAlthough the Nashville real estate market may be red hot right now, that doesn't mean home sellers still shouldn't take certain measures to ensure they get top dollar for their home. Inventory is low and demand is up, but if your home isn't presented in a way that entices all those active home buyers out there, selling it may still be difficult, regardless of how scorching Nashville real estate is right now.

If you look around online, you'll probably find all kinds of tips and tricks out there for buying your first home. But what if you've already went down that road and are now ready to sell your first home? If this sounds like the situation you're in and want to take advantage of such a prime sellers market, here are a few things we recommend to help make the selling process easier and more effective for anybody who's never sold a home before:

Spruce up your home

The first tip is to spruce up your home and make it move-in ready. Fix leaky faucets, update your landscaping and make basic cosmetic repairs to make your home look as appealing as possible.

Hire a qualified real-estate agent

Next, find a qualified real-estate agent. You can always ask friends and family for referrals but it may be more important to find someone experienced with selling and buying homes in your neighborhood.

Be flexible with showings

A good real estate agent, like one of our own, will also likely urge you to be flexible with showings. If prospective buyers have to wait too long to get inside for a peek they may be less likely to stay interested.

Price it correctly

Your agent can also help you price your home correctly from the beginning. An overpriced home keeps a home on the market longer and deters potential buyers.

Plan for negotiations

Finally, plan ahead for possible negotiation points. From closing costs to the closing date and the price, there are all kinds of things that come up during negotiations and you need to know from the start what is most important to you, the seller.


Home Sellers TipIf you're thinking about selling your Nashville home, there's probably a million things going through your head right now. Moving is usually a stressful time for almost anybody, but among the top priorities when finally making the decision to sell should always be making sure you get the most money you can during the home selling process.

Like many things, not all homes are created equal, so determining how to price your home right is one of the most important elements in how much success you'll have once listing your home or condo. Of course our team of local Nashville real estate agents will be there every step of the way should you decide to list with the Ashton Real Estate Group, but in the meantime, here's a look at just a few quick tips to consider when putting a value on your home:

Don't overprice your home. Often the biggest mistake you can make when listing your Nashville home, overpricing your home from the start makes it hard to generate any interest out of the gate, not to mention it will almost always guarantee your home will sit on the market longer than it normally should. Regardless of what you want out of your home, price it for what you can realistically expect to get.

Study previously sold homes. Taking past sales into account is an excellent way to gauge market conditions. Home buyers will almost always use sold data when coming up with an offer, so always be one step ahead and know what comparable homes are not only listing for, but actually selling for as well.

Anticipate negotiation. Few sellers go into the home selling process wanting to take less than the original asking price. But depending on market conditions, and what you're selling, buyers will almost always make an offer under the list price. Should this scenario play out, don't get discouraged and anticipate this might happen when initially pricing your home. Just be careful not to substantially overprice it for the sole purpose of leaving room to negotiate.


Selling a home in todays market means that you should be taking every advantage of all the new marketing channels that are now available.

Real Estate Magazines

In the past, realtors would list their personal listings in the local real estate magazines, and potential buyers would pick up the magazine, and use this as their reference material for searching for their next home. Usually where there was one magazine there were several. That meant that the buyer would pick up all the magazines and look through them all. It also became clear that the most popular magazines were the ones with the color pages and pictures.

Searching Online

These magazines are still available for buyers but recent statistics have shown that 94% of buyers start their search for property online! The internet has become one of the best and easiest places for a prospective home buyer to start their research in to the availability of homes and property in their desired price range and area.

The introduction of search engines like Google, Bing and Yahoo made it very simple for buyers to refine their search for real estate in their preferred location and now they can search "virtually" from any place in the world as long as they have internet access and some kind of device to view the web pages on.

For someone moving to Nashville from another state, the internet has proven to be a vital piece of the property search process. Just by searching for 'Nashville Real Estate' they are now presented with websites that offer the buyer the ability to do some research on the homes for sale in Nashville.

Listing with TAREG (The Ashton Real Estate Group) of RE/MAX Elite

TAREG has consistently ranked in the top 3 teams within RE/MAX for all of TN and KY for the past 5 years and is the #1 team with RE/MAX Elite in Nashville. This success has given us the ability to continually strive to promote the team and our business to ensure you home will be seen by as many people as possible.

Getting Your Home Featured

Getting your home featured online is a must. As a home seller, these are the people that you would want to be reaching. Just listing your house in the Middle Tennessee Regional Multiple Listing Service is the starting point. To have your home then featured on our site as a preferred listing gives you the opportunity to have your home seen before all the other homes.

Featured by City and Price

Your home will be featured by city and price on our website. Take a home for sale in Brentwood that is valued at around the $500,000 price point. The buyer would likely be looking at homes just under $500,000 and over $500,000. In the link above you can see that there is a great range of homes available to the buyer. The listings in this site are organised by the most expensive to the least expensive. In this case the most expensive would be $600,000 but if you have a home listed, at say $550,000, you would be featured at the top of the page as a featured listing with TAREG. Now your home is being shown first in an appropriate price range which is giving you the first chance at making an impression on that buyer.

Featured by Subdivision

Also, if your home is located in a subdivision in Brentwood, your home will be featured at the top of the page. For example, if your home is in the Governors Club in Brentwood, then your property would be featured at the top of the page. If your home was the lowest priced, it would still appear as a preferred list and again giving your more exposure than the other homes that are listed in The Governors Club.

The Marketing Advantage

TAREG of RE/MAX Elite does have the marketing advantage of also featuring your property on the home page of The site is search engine independent, in that many people just type in to be able to do research about the Nashville area before they move here, and find our website.

As they are doing there research, and they come to to find out about the City, the culture, the activities available for all the residnts, they will be subliminally thinking about seeling their home and buying a new home. When they see the real estate section of the site, they will then realise that they will want to know what kind of homes they can afford. Typically people look to buy the same kind of house , or slightly bigger, if they are moving. So with anyone visiting to contemplate a move to Nashville, they will search for a home in the price range and profile that matches their current home.

As one of the top real estate teams in all of Nashville we have 18 agents who all have a data base of clients looking for homes in a wide variety of price ranges and areas. Listing your home with TAREG of RE/MAX Elite will you instant access to a pool of buyers looking to buy homes in the Nashville area.

The end result is that TAREG is capturing buyers who are seriously considering moving to or within the Nashville area. If you are selling a home...then contact us so we can help you put your home in front of all thses buyers, and in our database of existing buyers, and make your home one of the TAREG featured homes!!!


Marketing Home for SaleSometimes, you need to step up to the plate and help with some of the marketing for your home for sale. When you sell a home in Nashville, your real estate agent will handle most things, but you can certainly help out. Here are a few ways you can market your Music City home for sale.

Understand Where Buyers Go

There are four specific places that first time buyers go to find a new home. The National Association of Realtors did a study and about 99% of buyers find their new home through these four channels:

  • Family and Friends
  • Agents
  • Online
  • Yard Signs

These fours avenues should certainly be considered when you're marketing. You want to include all four categories as you develop your strategy, if possible.

It's also important to understand that you don't have to wait until your home is actually listed to start the marketing. You can start telling people as soon as you're 100% you will be selling. Spread the word through your own family and friends, put up a yard sign and get your home on the social media channels online, if possible.

Getting Listed in the Right Place Online

Getting your listing seen online requires the right strategy. There are a ton of different homes for sale throughout the city, which means you have to do the right things to get yourself to the top of the list. Here are a few tips to help enhance your online listing.

  • Use sites, such as Zillow to enhance your listing and give it a little extra help
  • Choose an agent capable of using both their network and the right SEO to get you listed on Google
  • Add pictures and video for buyers to tour your home online
  • Choose the Best Message

Another part of your marketing strategy needs to be the message you choose. You want to use both words and images, because images will do more for your home than anything else. The front photo is the most important part of the listing, but other photos will make a huge difference.

These are just a few of the many tips you can use to help market your Nashville home. Make sure you hire the right agent and take their advice for marketing, as well.


Selling anything with a hefty price tag can be tough, considering how there's usually a limited number of prospect buyers actually willing and capable of shouldering the expense. When it comes to selling a house, things can get pretty difficult, mainly because the residential market of Nashville, as well as almost every other market in the US, has shifted towards the buyers' favor.

Honing negotiating skills is something that all parties in any transaction should do, especially for those looking to sell their dwellings. As competition gets fierce, evolving owner strategies will be necessary to stay on top. While conventional methods could help, there are several other methods (which don't really have a name) which can aid any homeowner secure the best possible deal.

That being said, the first technique would be to create a video of the house plus surrounding amenities, and post it at What needs to be included here is footage of the entire dwelling, as well as a verbal explanation telling the viewers about any key areas that'd probably be appealing to them. Taking a video of the neighborhood would be great too, as well as any nearby shops, cafes or malls.

Second would be to utilize the power of social media – while many buyers go to online MLS or real estate websites to find a potential residence, waiting around for the best offer isn't exactly the fastest way to sell a house, especially when the Nashville residential market is currently filled with inventory.

Putting the word out to friends and acquaintances through websites such as Facebook or Twitter is a very effective way to reach out to thousands of people without having to pay a dime. Networking is a powerful tool in any industry, and there's no excuse as to why it can't be used here.

Third method that home owners can use to stay ahead of the competition revolves around conditioning – ensuring that door knobs are fixed, light bulbs replaced, flooring is spotless, and other furniture and fixtures are in excellent condition is something that some sellers neglect.

People who buy second hand homes subliminally detest the idea that someone else lived there first. By ensuring all necessary repairs are implemented, pest control services are availed, and everything looks the best it possibly can, sellers will be able to make their dwellings appear more attractive in the eyes of interested buyers, and be able to secure better deals.


Gary Ashton

The Ashton Real Estate Group of RE/MAX Advantage

The #1 Real Estate Team in Tennessee and #2 RE/MAX team in the World!


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