When the Seller Becomes the Bank
Most buyers assume a bank must be involved to buy a home, but that’s not always the case. Enter the seller carry, also known as seller-carried financing.
A seller carry happens when the seller finances part (or sometimes all) of the purchase price for the buyer instead of the buyer getting a traditional mortgage from a lender. In this setup, the seller essentially acts like the bank, and the buyer makes monthly payments directly to the seller.
How Seller Carry Used to Be Viewed
Historically, seller carries were more common for buyers who had trouble qualifying for a loan perhaps due to limited credit history, self-employment, or a recent short sale. Buyers would often pay a higher interest rate in exchange for flexibility and access to homeownership.
How Seller Carry Is Used Today
Today, seller carries are often a strategic tool, not a last resort. In some cases, sellers offer below-market interest rates to attract more buyers or help a deal stand out, especially when interest rates are high or buyer financing is tight.
A home sells for $1,000,000
The seller finances $800,000
Interest rate is 5%, amortized over 30 years
A balloon payment is due in 3 years
This means the buyer makes monthly payments as if it were a normal loan, but must refinance or pay off the remaining balance at the balloon deadline.
Why Buyers and Sellers Consider Seller Carry
More flexible qualification terms
Potentially lower interest rates
Faster, simpler financing
Attract more qualified buyers
Earn interest income over time
Sell in a slower or high-rate market
A seller carry can be a win-win when structured correctly, but it’s not a one-size-fits-all solution. Terms like interest rate, down payment, length, and balloon timing matter greatly and should always be reviewed with experienced professionals.
If this sparks your curiosity, ask your agent for details, this is one of those creative real estate tools that can unlock opportunities when traditional financing doesn’t quite fit.
