Is seller financing better than taking a private loan?

Question

Turnrow Capital · Accepted Answer

If the seller offers reasonable terms, take it — seller financing can beat any lender: no appraisal, no closing timeline pressure, negotiable rate, and sometimes 10% down. Use a private loan when the seller wants cash, the offered terms are worse than market, or a short balloon leaves you with refinance risk anyway.

Seller carry is common in farmland precisely because sellers know their land is hard to finance conventionally, and installment sales spread the seller's capital gains over years — a genuine tax reason to say yes. When it works, it is the cheapest, simplest structure in this entire comparison. Negotiate for it before assuming you need a lender at all.

The failure modes are structural. Many seller notes carry 3–5 year balloons, which means you have not avoided the financing problem — you have postponed it, often with a due-on-sale hair trigger and a seller-friendly default clause drafted by their attorney. And a seller carrying paper often holds firmer on price; run the math on price-versus-terms before celebrating the low rate.

Hybrid structures work well: a private first at 50–60% LTV with a seller second behind it can get a deal done that neither party could finance alone. Have your own attorney paper any seller note — the deals that go bad are almost always the ones documented on the seller's forms.