As the average monthly mortgage has increased significantly from earlier this year (when interest rates were at a 5,000-year low) and prices continue to rise, a growing number of homeowners looking to sell have begun to identify new ways to attract buyers, and generate residual cash flow at the same time: seller financing.
Rather than discounting the sale price, some sellers have been offering potential buyers lower-cost financing than they would otherwise receive from lenders. These financing solutions often bypass the need to go through a bank for the buyer and can generate an attractive ROI (e.g., 3.5%) on the bridged capital for the seller. Typically, they have a 5-10 year maturity period with a balloon payment at the end, so that the buyer can refinance with a bank if they believe that rates will modulate downward. In many cases, these structures are a win-win for both parties.
Source: Forbes
