What is meant by seller financing in real estate?

Seller financing refers to a situation in real estate where the seller of a property provides financial assistance to the buyer, allowing the buyer to make payments directly to the seller instead of securing a mortgage through a traditional lender such as a bank. This arrangement can benefit both parties: the seller can sell their property more quickly and potentially earn interest on the financed amount, while the buyer may have an easier time obtaining financing, particularly if they have difficulty qualifying for a conventional loan.

In a seller financing agreement, the seller and buyer typically negotiate the terms, including the interest rate, repayment schedule, and any other conditions. This option can be advantageous in markets where bank financing is tough to secure or when both parties are looking for a more straightforward transaction process.