How to Sell Your House with an Owner Financing Deal (Pros and Cons)
Owner financing
Owner financing—also called seller financing—allows you, the homeowner, to act as the lender instead of requiring the buyer to get a traditional bank mortgage.
Here’s how it works:
1️⃣ You sell your home to the buyer without them needing a bank loan.
2️⃣ The buyer makes monthly payments to you, just like a mortgage.
3️⃣ You hold the title until the home is fully paid off (or until they refinance with a bank).
It’s a win-win in many cases: Buyers who struggle to get traditional financing can still own a home, while sellers receive steady monthly income—often with better terms than a bank would offer.
Pros of Selling Your Home with Owner Financing
Many homeowners choose owner financing because of its unique advantages. Let’s take a look at why it could be the best option for you.
✅ 1. Sell Your Home Faster
🏡 No need to wait for bank approvals or loan underwriting—the sale can close quickly, often within days instead of months.
✅ 2. Higher Selling Price
💰 Because you’re offering flexible financing, you can often sell your house at a premium price—buyers are willing to pay more when they don’t have to go through a bank.
✅ 3. Steady Monthly Income
💵 Instead of receiving a lump sum, you collect consistent payments—great if you want passive income without the headaches of being a landlord.
✅ 4. Save on Realtor Fees
🚫 No real estate agent required! You avoid the 6% commission that typically comes with a traditional sale.
✅ 5. Attract More Buyers
🏠 Many potential homeowners can’t qualify for traditional loans due to self-employment, credit issues, or lack of a Social Security number. By offering financing, you expand your buyer pool significantly.
Cons of Selling Your Home with Owner Financing
While owner financing has major benefits, there are a few risks and drawbacks to consider before moving forward.
❌ 1. You Won’t Get Paid in Full Right Away
💰 Unlike a traditional sale where you receive the full amount at closing, you get paid over time—so if you need fast cash, this may not be ideal.
❌ 2. Risk of Buyer Default
⚠️ If the buyer stops making payments, you may have to go through foreclosure or take legal action to regain the property.
❌ 3. Property Tax & Insurance Risks
🏡 Since your name is still tied to the property, you’ll want to ensure the buyer keeps up with insurance and taxes—otherwise, you could be on the hook.
❌ 4. You May Need to Handle Repairs if You Foreclose
🔧 If the buyer fails to pay and you take the home back, you may need to make repairs before reselling.
💡 Risk Tip: To protect yourself, require a large down payment and properly vet your buyer before offering owner financing.
How to Set Up an Owner Financing Deal Safely
If owner financing sounds like a good fit, follow these steps to protect yourself and ensure a smooth transaction:
🔹 Hire a real estate attorney to draft a legally binding contract.
🔹 Require a strong down payment (10-20%) to reduce default risk.
🔹 Check the buyer’s financial history—make sure they can afford the payments.
🔹 Use a loan servicing company to handle payment collection.
🔹 Ensure the buyer has homeowners insurance to protect your investment.
By setting up the right protections, you can enjoy passive income while minimizing risks.
Final Thoughts: Should You Sell with Owner Financing?
Selling your home with an owner financing deal can be a great alternative to a traditional sale—allowing you to sell quickly, earn more money over time, and help buyers who can’t get a bank loan. However, it’s not for everyone. If you need fast cash or don’t want to deal with long-term payments, you may want to consider selling your house for cash instead.
No matter which route you take, I’m here to help you explore your options and find the best solution for your situation. If you’re interested in selling your home quickly—whether through owner financing or an all-cash offer—reach out today!
📞 Call now to discuss your options!