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Since the onset of the pandemic, the capital markets have slowed. For the borrowers that have been able to secure financing, the market uncertainty has changed the length of escrow and the types of properties lenders will finance. As a result, fewer deals have closed, even for investors willing to buy in this market—but there is new financing alternative that has some buyers excited: seller financing. In a seller financing deal, the transaction closes immediately and the buyer makes principal and interest payments to the seller.

With seller financing, the bank option is taken away, and there is no bank requirements, no loan contingency, no appraisal,” John Katnik of James Capital Advisors tells GlobeSt.com. “It is a much easier way to do a transaction right now. And, for the seller, if you are willing to stay in the deal for a few more years, there are a lot of benefits. You collect interest payments on the loan, and the collateral is the property, so if the buyer doesn’t perform, you can take the property back. Seller financing also opens up the buyer pool.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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