Seller-Financed Sale

DEFINITION of 'Seller-Financed Sale'

A transaction where the seller also acts as the lender to the buyer. Seller-financed sales thereby eliminate third-party lenders from the transaction. This type of sale can be used to finance the purchase of a home, business or any other type of property.

BREAKING DOWN 'Seller-Financed Sale'

Seller-financed sales generally have no preset lending criteria that must be met; lending institutions do. This type of sale can provide more favorable terms to the buyer, but it may also entail greater risk for the lender. The IRS imposes a mandatory minimum interest rate on seller-financed sales of any kind, although the timing of interest reporting differs depending upon the type of property being sold.

RELATED TERMS
  1. Real Estate Short Sale

    Any sale of real estate that generates proceeds that are less ...
  2. Owner Financing

    When a property buyer finances the purchase directly through ...
  3. Single Interest Insurance

    Insurance policy for lenders or lessors to protect their security ...
  4. Bill Of Sale

    A document that details in writing a sale of goods or transfer ...
  5. Third-Party Transaction

    A third-party transaction is a business deal involving a buyer, ...
  6. Sale

    1) In general, a transaction between two parties where the buyer ...
Related Articles
  1. Personal Finance

    Ins And Outs Of Seller-Financed Real Estate Deals

    Seller financing works like this: Instead of a buyer receiving a loan from a bank, the person selling the house lends the buyer the money for the purchase.
  2. Personal Finance

    Purchasing A Short-Sale Property

    If you are looking for a good deal and have time to wait, a short-sale house may be for you.
  3. Financial Advisor

    Helping Clients Navigate Short Sales And Foreclosures

    Both buyers and sellers can benefit from a real estate professional experienced in dealing with short sales and foreclosures.
  4. Investing

    Arm's Length Transaction

    An arm’s length transaction describes business deals in which the buyer and seller act independently and with no interest in the other’s benefit.
  5. Personal Finance

    The Pros and Cons of Owner Financing

    Details on the upside and risks of this type of deal for both the owner and the buyer.
  6. Investing

    What Does a Lender Do?

    A lender provides funds to another with the expectation those funds will be repaid with interest.
  7. Markets

    How Economies Depend on Sales

    A sale is a transaction in which a buyer receives goods or services, and the seller receives money or some other form of compensation.
  8. Personal Finance

    What You Should Know About Home Sale Contingencies

    A home sale contingency protects buyers who want to sell one home before purchasing another.
  9. Managing Wealth

    Short Sale Strategies For Buyers And Investors

    Here's how to figure out if you will make money on buying a short-sale property – and when to steer clear of a deal that's too good to be true.
  10. Retirement

    Find a Reverse Mortgage Lender You Can Trust

    Reverse mortgages are a notorious lending market. Follow these steps and the chances are good you’ll find a trustworthy, competent lender.
RELATED FAQS
  1. What's the difference between short sales and foreclosures?

    Understand the difference between a short sale and a foreclosure; both result in the loss of a home, either through a sale ... Read Answer >>
  2. How many years after the sale of a home must pass before you are considered to be ...

  3. When short selling a stock, how long does a short seller have before covering?

    There are no general rules regarding how long a short sale can last before being closed out. A short sale is a transaction ... Read Answer >>
  4. Are APRs different in different countries?

    Learn about the term APR and how it is used in the United States and other countries. Explore why different lenders charge ... Read Answer >>
  5. What factors should I consider when shopping for the best mortgage lender?

    Comparing lenders to obtain the best mortgage loan requires research and willingness to shop around for the best loan to ... Read Answer >>
  6. Does inflation favor lenders or borrowers?

    Find out under what circumstances inflation benefits borrowers more than lenders and in which situations inflation can be ... Read Answer >>
Trading Center