---
id: "concept-seller-financing"
type: "concept"
source_timestamps: ["00:20:00", "00:20:45"]
tags: ["financing", "deal-structuring", "interest-rates"]
related: ["concept-off-market-acquisitions"]
definition: "A transaction where the property seller acts as the bank, providing a loan to the buyer, often yielding better terms than traditional financing."
sources: ["jayroberts"]
sourceVaultSlug: "jay-roberts-florida-condo-development-2026Jun25"
originDay: 4
---
# Seller Financing in Commercial Real Estate

## Seller Financing in Commercial Real Estate

**Definition:** A transaction where the property seller acts as the bank, providing a loan to the buyer, often yielding better terms than traditional financing.

A transaction structure where the seller of a property acts as the lender for the buyer, rather than the buyer securing a traditional bank loan. [[entity-jay-roberts]] highlights this as a **crucial tool in high-interest-rate environments** — see the open question on rates in [[question-interest-rate-impact-d4]].

### Worked Example

- **Alternative path:** Borrow from a private debt fund at 10–12% interest **plus points**
- **Seller-financed path:** Seller holds a note for **60% of the purchase price at 6–7%**

### Mutual Benefits

| Buyer Gains | Seller Gains |
|---|---|
| Lower capital cost | Achieves asking price |
| No appraisals or lender fees | Defers capital gains taxes |
| Faster close | Steady yield on the note |
| Fewer closing hurdles | Senior, secured position |

This is typically only available through [[concept-off-market-acquisitions]] — once a property is broadly marketed, the seller is incentivized to demand all-cash, no-contingency offers.

### Counter-Perspective

Seller financing is **not free money**. Sellers often demand a higher headline price, stronger covenants, shorter maturities, or a meaningful equity check in exchange for financing. The lower nominal rate can mask a higher total cost or risk profile.


## Related across days
- [[concept-good-vs-bad-debt]]
- [[contrarian-debt-is-an-asset]]
- [[concept-cost-of-capital-arbitrage]]