Wealthy home sellers are using a risky enticement to drum up buyer interest

• High mortgage rates have revived interest in creative financing options, including seller financing.
• Home sellers offering loans to their buyers is increasingly common in higher-end transactions.
• It appeals to self-employed or cash-rich buyers, as well as sellers looking for an edge in the market.

Carson Austin began to worry after his home had been sitting on the market for a couple of months with barely any interest from potential buyers.

It was early 2025, and he had listed the 4,600-square-foot Georgetown, Texas, property for $1.6 million, which he thought was a competitive price, comparable to other large homes in the area. But mortgage rates were hovering around 7%, keeping buyers out of the market and sales stagnant.

So Austin decided to try something a bit unconventional. He offered seller financing — an agreement in which the seller acts as the lender, typically providing the buyer with a short-term home loan. In Austin's case, he held firm on the home's sale price, but offered a below-market interest rate to entice buyers.

As soon as he offered the creative financing option, interest picked up. Within two days, the house was under contract with a buyer who agreed to a 35% down payment and a six-year seller-financed loan with a 4% interest rate. The sale closed just days later. Austin worked with a firm, MORE Seller Financing, to facilitate the deal, vetting and approving the buyer, and structuring the transaction with the help of lawyers and other specialists.

Austin said his buyer only came to see his house because of the below-market interest rate.

"I 100% know that the only reason that house sold, especially in that timeframe, was the owner financing — they told us that," he said.

Seller or owner financing gained popularity in the 1970s and 1980s, when interest rates were sky-high, but it developed a bad reputation for lacking sufficient protections, particularly for buyers. Federal regulators have criticized the model for exploiting low-income buyers with high interest rates on low-quality homes in poor neighborhoods.

However, as mortgage rates have soared since 2022, the creative financing strategy has regained popularity, despite remaining a niche offering. The practice is increasingly common in higher-end home sales, according to Realtor.com. Sales involving seller financing grew by 8% in dollar volume to more than $30 billion between 2023 and 2024, according to Note Investor.

"This used to be kind of a sketchy thing that happened with really cheap properties and really under-qualified buyers, and now the median price is on par with what's on the market as a whole," said Joel Berner, a senior economist at Realtor.com. "So it's moving upmarket, becoming more widespread, happening on higher dollar properties."

The upsides and risks of seller financing

Seller financing often appeals to buyers who want a below-market interest rate or who are struggling to qualify for a traditional mortgage. The so-called bridge loan from the seller, typically lasting about three years, provides the buyer with time to wait for rates to come down and find a traditional mortgage. Meanwhile, sellers can get an edge in the market and benefit from earning interest on the loan.

Sellers often use the financing strategy to market a home that isn't selling. Both buyers and sellers can benefit from a quicker timeline and can avoid fees, including mortgage origination and appraisal costs.

"At its best, seller financing creates genuine win-wins," said Ryan Leahy, who founded MORE Seller Financing. "Sellers often preserve more equity and earn predictable income, while qualified buyers benefit from payments that can be meaningfully below market rates."

But the practice can be financially and legally risky without the right protections. Leahy conceded that seller financing can have "lots of pitfalls and risk if it's not done right." He argued that his firm helps protect both parties by educating them about the process, ensuring the agreement is in compliance with the law, and connecting them with all the specialists they need, including residential mortgage loan originators, lawyers, title companies, and other servicers.

It's more popular with wealthier people in part because the transaction "requires financial stability and liquidity of the seller," Berner said, while the buyer needs "to be able to either change what's keeping them from getting a mortgage in three to five years, or rates to come down considerably in three to five years."

But while the financing type has gained popularity, it remains a niche practice. Less than 1% of home listings mention private financing, Berner said.

MORE deals with higher-end homes — typically valued between $800,000 and $3 million, Leahy said. Sellers typically have a fair amount of cash and equity in their property, allowing them to wait several years before receiving the full cash from their home sale. MORE's approved buyers are often self-employed with income that can be challenging to account for, making it more difficult to qualify for a mortgage.

"There's so many people out there self-employed or have income that doesn't qualify for a traditional mortgage, meaning you have influencer income, crypto income, side hustle income," Leahy said. "Seller financing isn't going away."

When another of MORE's clients turned to seller financing to sell his multi-million dollar Austin, Texas, home, he realized that his potential buyers faced a different conundrum. They could afford to buy a home all-cash, but preferred to invest their money elsewhere, avoiding high interest rates.

James S., who requested partial anonymity to protect his privacy, eventually sold his 5,200-square-foot house for $2.9 million in January 2025, providing the buyer with a three-year loan at a 5.5% interest rate.

"It's always that question: pay cash for a house or use that money for other things," he said. "People could take the money, and they could go invest in the stock market, they could do other business ventures."

James and his wife also didn't need all the cash from their home sale immediately. They haven't bought a new home yet and are instead living in furnished short-term rentals in California as they figure out their next steps.

"My mortgage is being paid down," James said. "And we make some money per month as well, so that's also good."