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The Win, Win & Wins of Creative Real Estate Financing

Those of us who are lucky enough to learn about the opportunities and advantages of investing in real estate, tend to be even more excited when we learn about creative real estate investing. One reason for this is, creative financing is usually a win, win, for both the buyer and the seller.

There are numerous ways to be creative when buying and selling real estate, but the most basic and popular form of creative financing is eliminating the bank, by using seller financing (SF). Instead of going to the bank and putting down 5%, 15% or 20%, the buyer eliminates the bank and gives the down payment directly to the seller. This simple creative step eliminates the bank from the transaction (equation) and allows the seller to keep all of the profits the bank would have received, over the life of that bank loan. This is a lot of money, in the form of fees and interests, which is withheld from the bank and goes directly to the seller!! (or whoever does the financing in place of the bank.) (If the seller does not want to do the financing, we will find another individual who will do it. it might even be me.)

We are all aware of using creative financing when we buy, but MOST OF US TEND TO FORGET about the tremendous advantages available to us AS SELLERS when using creative financing or seller financing!! With seller financing we can set ourselves up to receive multiple benefits, month after month, for many years to come. Sometimes those monthly benefits continue for 15 to 30 years! no well informed and educated seller/investor wants to be the one who forgot, or missed the opportunity, to take advantage of the lucrative earnings that are awaiting the informed seller who uses seller financing. This low hanging fruit is just waiting there, for the informed seller to pick. this is a big win, for the seller and the buyer as well. It is win, win, win for everyone!

Undoubtedly, there are a number of advantages for both the seller and buyer when using seller financing. Here are a few of the seller advantages:

1. The property can be sold for a higher price when using seller financing ("SF"). since the buyer appreciates this chance to go around or eliminate the bank, and for the other benefits this affords them, they are willing to pay more. (when seller financing is available, the buyer has his eye on the prize, not on getting a discount. What is the prize? Owner financing or seller financing).

2. Due to the extra money which will be paid to the seller over the life of the loan, the buyer will pay double or triple the actual sale price to the seller. this is typical with most loans and the banks usually receive these funds. Since the bank has been eliminated, the seller receives all of the interest and principal payments. The seller may choose to assign or sell their payments to someone else and receive all cash at closing.

3. Since SF allows for a higher sale price as mentioned above, it simultaneously eliminates the bargaining and haggling over price reductions which usually occurs when conventional bank financing is used. Thus, price negotiating and reduction is for the most part eliminated. This can be significant! without SF we must face this problem and deal with it again.

4. SF will eliminate the request for repairs and other nit picking, which can be common in conventional financing.

5. SF eliminates requests for seller concessions which is common when realtors are involved. SF can eliminate realtors, but not always.

6. Closing costs will be lower with SF.

7. SF can usually eliminate the need for a realtor and thus, eliminates the realtor fee which tends to be 6%. on a $200,000 sale, that would be a savings of $12,000 or a savings of $24,000 on a $400,000 house.

Creative financing or SF is exciting because it can benefit the buyer and the seller. Thus, we can call it a win, win agreement. By eliminating the bank and often the realtor, there is a lot of extra money that can go directly in to the sellers pocket.

Creative SF also gives the seller the flexibility to keep all of the benefits and extra money for himself or to sell all or part of it at the closing table. Thus, the seller may cash out completely at the closing table and receive all of his money then. The seller may also choose to take some funds at the closing and receive payments over time on the balance. These payments will usually earn an interest rate payment which far exceeds what the bank is paying on passbook savings accounts or their annuity accounts.


What is the difference between 7% and 0.2%?

Answer: thirty five (35)

7% is 35 times more than 0.2%

(.07 divided by .002 = 35)

What does all of this mean? see below!!

$1,000 x .002 = $ 2.00 (2 dollars)

$1,000 x .02 = $20.00 (20 dollars)

$1,000 x .07 = $70.00 (70 dollars)

$10,000 x .002 = $ 20.00 (20 dollars)

$10,000 x .02 = $ 200.00 (200 dollars)

$10,000 x .07 = $ 700.00 (700 dollars)

You get the point... but whether you do or not, feel free to reach out to us if you'd like to further discuss this topic by looking at the information provided below.

This article was edited and published via a joint effort of Dr. Pete Lorins (a renaissance man) and Richard "Dick" Hamilton (a seller financing expert). For more information on this topic, you can reach both of them via (773) 372-9656 or RECRUIT@RAPIDGIGSPLUS.COM. Lastly, this article is sponsored by


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