The California Investor
Seller Financing
By JC Pacific Corp Last updated 2026-10-02
Seller financing is an arrangement where the seller acts as the lender, carrying part or all of the purchase price instead of a bank. It can make a deal possible when conventional financing is not, but the terms are whatever the parties negotiate, so the agreement must be written carefully.
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You buy the property and pay the seller over time under a promissory note and deed of trust, typically with a down payment, an interest rate, a term, and often a balloon payment at a set future date. The seller keeps a secured interest in the property until the note is paid.
Why Sellers Offer It
Sellers finance to sell faster, to meet a broader buyer pool, to generate steady income from the note, or to defer the tax timing of a sale. A buyer with strong cash but unconventional financing may find a seller willing to work.
The Terms to Understand
- Interest rate and how it compares with bank financing
- Term and payment schedule
- Balloon payment dates and amounts
- Default and foreclosure provisions
- Prepayment and assignment rights
The Risks
Balloon payments require refinancing or payoff at a set date; if you cannot refinance, you could face default. Seller financing can also include above-market rates or unusual terms. Read everything and get qualified legal review before signing.
A Note on This Guide
This is general education, not legal or lending advice. Structuring owner financing involves California real estate law, and both parties should work with qualified legal and tax professionals. JC Pacific is a real estate brokerage, not a lender.
Frequently Asked Questions
What is a balloon payment in seller financing?
A lump sum due at a future date that pays off the remaining balance. Common in seller-financed notes, and it requires a refinance or sale at that point.
Is seller financing cheaper than a bank loan?
Not necessarily. Rates are negotiated and can be higher, similar, or lower than bank financing. Compare the full terms, including the balloon, against alternatives.
Who holds the title in seller financing?
The buyer typically takes title to the property, and the seller holds a deed of trust securing the note. If the buyer defaults, the seller can foreclose.
Educational information
This guide provides general, educational information about California investment real estate. Any calculations, projections, or examples are estimates for educational and planning purposes only and do not constitute financial, tax, legal, lending, or investment advice. Market conditions, loan programs, rates, underwriting requirements, laws, and rules change over time, so verify current information with qualified professionals before making decisions. JC Pacific Corp is a real estate brokerage, not a lender, tax adviser, or law firm.
A note on financing: loan terms, interest rates, underwriting requirements, down payments, and program availability vary by lender and by borrower, and they change frequently. Nothing in this guide is an offer to lend. JC Pacific Corp is a real estate brokerage and is not a lender, mortgage broker, or loan originator. For your specific situation, obtain current quotes and program details from licensed mortgage professionals.
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