Seller financing, explained plainly
Turning the facility into a monthly check instead of one big one.
This is the part of a sale that almost nobody explains to owners, and it is often worth more than the last fifty thousand dollars of argument over price.
The idea in one paragraph
Instead of handing you the whole price at closing, we pay you a down payment and then a fixed amount every month for an agreed number of years, with interest. You hold a note and a deed of trust or mortgage on the property, exactly the way a bank would. If we ever stopped paying, you foreclose and the facility comes back to you, and you keep everything paid to that point. In the meantime you have income you do not have to work for, at an interest rate a bank will not pay you on a savings account.
A worked example
Say we agree the facility is worth nine hundred thousand dollars. Two ways to receive it.
| All cash at closing | Carrying the paper | |
|---|---|---|
| At closing | $900,000, once | $180,000 down |
| Then | Nothing further | $6,471 a month for fifteen years |
| Terms | None | $720,000 at 7 percent, amortized over 180 months |
| Total received | $900,000 | About $1,344,780 |
| Of which interest | None | About $444,780 |
| Your security | None needed | First position on the facility itself |
| When gain is taxed | Mostly in one year | Generally spread across the years you are paid |
Those figures are arithmetic on the terms shown, not a quote and not a promise. Real terms depend on the facility, the down payment, and what we agree on. The tax treatment of an installment sale depends entirely on your basis, your depreciation history, and your own situation, and there are parts of it, depreciation recapture in particular, that are not spread out. We are not accountants and this is not tax advice. Take the page we build you to your CPA and let them tell you which column is better for you.
Why owners choose it
Income without the work
The same predictable money arrives, without the Sunday phone calls, the gate that sticks, the tenant who stopped paying in March, or the insurance renewal.
Usually a higher price
A buyer who is not paying a bank can pay more for the property. Much of the negotiating gap between what you want and what a cash buyer can do closes here.
Something to leave behind
The note is an asset. It can pass to a spouse or to children as a stream of payments rather than a building somebody now has to run, which is the part most families are quietly worried about.
And the honest risks
You are not paid in full on day one, and that matters. If you need the entire amount immediately, for a medical situation or to buy something else outright, carrying paper is the wrong tool and we will tell you so.
You are also relying on the buyer to keep paying. That is why the note is secured by the property, why we expect you to ask what happens if we default, and why any decent version of this includes a real down payment. Ask your attorney to read the note before you sign it. Every seller should, and we have never once been annoyed by it.
There is a third option people forget: some of each. A larger amount at closing to cover whatever you need covered, and a smaller note for the income. Most of the deals that make sense land there.
Want to see both columns for your facility?
We will build the same comparison using your real numbers, at no cost. It is usually the page owners end up showing their family.