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. Owner Financing

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

    Insurance policy for lenders or lessors to protect their security ...
  3. Third-Party Transaction

    A third-party transaction is a business deal involving a buyer, ...
  4. Retail Lender

    A lender who lends money to individuals rather than institutions. ...
  5. Lender Confirmation Auction

    A type of foreclosure auction where the highest bid must be approved ...
  6. Sale

    1) In general, a transaction between two parties where the buyer ...
Related Articles
  1. Home & Auto

    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. Home & Auto

    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. Professionals

    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. Home & Auto

    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. Credit & Loans

    What Does a Lender Do?

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

    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. Home & Auto

    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.
  9. Credit & Loans

    How To Pick The Right Lender When Refinancing A Mortgage

    Refinancing your mortgage has never been easier with the range of lenders and access to information that are available to you.
  10. Home & Auto

    5 Things You Need To Get A Mortgage Pre-Approved

    Home sellers normally require buyers to have a pre-approval letter, showing the lender has approved a specific loan amount.
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. 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 >>
  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. 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 >>
  5. 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 >>
  6. What’s the difference between a mortgage lender and a mortgage servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center