Howdy Auggflo:

I can only think of one Con: If the owner does not give you the deed and they get a lien or judgment against them it will be against the property if recorded properly. This is owner financing like a contract for deed or lease option deals where the owner holds title.

There are many benefits of buying with the owner carrying some or all the financing. I like leverage as the best pro. I did one house where the seller carried $25K second and I got a new first for $35K and the purchase price was only $50K. I got $10K at closing.

There are way less closing costs and loan fees with owner financing. I just sold a house where the buyer got a new loan and the fees were over $3K on a $100K loan not including the other closing costs. An appraisal is not needed either unless you want to have one done.

Quicker and easier to close with owner financing

Did I mention leverage.

Seller may be more flexible if payments are late and will not be reporting to credit bureaus. This could be a minus if you pay on time and want it reported.

Sellers are usually not as picky as far as the buyers credit report or other qualifications. I bought over 60 houses in the 90’s and never once had my credit pulled or had to copy tax returns or leases etc. or bank statements and did not even tell most of them what I made or what I did for a living. This is a little more difficult today but still easier than meeting lender requirements.

Hi Ted,

Thank you for the great respond. What kind of contract is bested when buying this way? Have you ever used a contract say from Staples?


Howdy Auggflo:

I use the standard Texas 1 to 4 family resale earnest money contract. I also use the Third Party Financing addendum if I am getting other financing in addition to the seller financing. I have not seen the Staples Agreement.

I’m in CT where would I get the standard resale contract for my state?


Howdy Auggflo:

Local Realtors, title companies, attorneys, I get mine on line thru the Real Estate Commission. You may want to search Google for the Ct web site.

Can someone explain to me as much as possible about this topic or give me an idea where I can read more to paint this picture?

Why woud an owner want to finance the property for you? This is the part I really can’t get.

If he finances it for you are you then paying him and he then he pays the mortgage company/bank?

Tedjr, if you’re responding----on the deal where the seller got a 25k second mortgage, did you first have an agreement with him to do that and then approach the bank for the 35k mortgage?

Anything and everything I can learn about this would be appreciated.



In CT you would use a regular Real Estate Purchase Contract along with an attached Purchase Money Note and Mortgage.

I can hook you with some forms up if you choose to contact me.


Howdy Naperbill:

Both lenders knew at the end. When the first lien holder found out they made me pay 6 months payments to them at the closing. The seller needed $25K net to pay the IRS. We closed on April 13th I believe.

Also there are different scenarios when the owner finances. Usually they are financing a small part and the buyer either gets a new loan or does a sub2 deal. The buyer pays both the seller and the first lien holder. Sometimes the seller will collect both from the buyer and then pay the 1st. If I am the seller I want to collect both and if I am the buyer I want to pay then separately.


Some flippers do this to get more for the property and like the idea of collecting payments for 30 years. They can also sell the notes after they have been seasoned for a while if they need the cash for another deal Some are just forced to finance because the property would not sell any other way or not fast enough to fit their needs.

I’m working a deal with an older gentleman that owes property free and clear. Given the situation, we can do a deal with very low downpayment and good interest rate such that he will get more cash flow per month without hassles of prop. mgmt while I’ll be able to use my cash very conservatively, get a great interest and not have to pay all those junk lender fees.

Granted these kind of deals are not typical, but can be a true win-win situation for buyer and seller.

I’m purchasing properties with Hard money, can I do owner finance on these for a year, then sell the note to a note buyer, to pay off my existing hard money loan?