The structure
The seller carries a note for part of the price. It may be the only financing or sit alongside a bank loan (subject to that lender's rules). Terms — rate, amortization, balloon date — are negotiated.
Why it can work for both sides
Buyers may get flexible terms and less reliance on bank underwriting; sellers get income and potential tax deferral. It often solves situations a conventional sale can't.
What to watch
Balloon payments you'll need to refinance, due-on-sale clauses on existing loans, and making sure the deal cash-flows with room to spare. Use an attorney and a third-party servicer.
This guide is general information, not legal, tax or financial advice. Talk to your own advisors about your situation.
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