What is it? It is when a seller of property (i.e. car, house, equipment, etc.) sells the property to a buyer on credit. In other words, the seller is the bank. The seller is the one that has the promissory note, mortgage and lien.
I am seeing more and more of these in my practice. Every time I do, there is a problem. The seller wants to be done with the buyer, but it doesn’t work that way. You can’t just walk away. You are the one responsible for collecting payment. When the buyer doesn’t pay, it’s your duty to enforce the note and foreclose or repossess. Again, YOU ARE THE BANK!
I always discourage these types of deals because they always go sidewise, in my opinion. The only reason the buyer wants to do a deal this way is because they cannot get a loan from a bank. With all the mortgage companies today, it should be a red flag when a buyer asks you about buyer financing. It is not hard to get a loan.
Bottom line is this: if a buyer asks you about seller financing, don’t do it! - 18 hours ago