Carson Austin began to worry after his home sat on the market for months with little to no interest from potential buyers.
It was early 2025, and he had listed a 4,600-square-foot property in Georgetown, Texas, for $1.6 million, which he felt was a competitive price comparable to other large homes in the area. But mortgage rates fluctuated around 7%, retention of buyers from the market and sales are stagnating.
So Austin decided to try something a little unconventional. He offered the seller financing, an agreement in which the seller acts as a lender, usually providing the buyer with a short-term mortgage. In Austin's case, he stuck to the home's selling price but offered a below-market interest rate to attract buyers.
Once he suggested a creative financing option, interest increased. Within two days, the home was under contract with the buyer, who agreed to a 35% down payment and a six-year seller-financed loan with an interest rate of 4%. The sale closed just a few days later. Austin worked with MORE Seller Financing to facilitate the transaction by vetting and approving the buyer and structuring the transaction with the help of lawyers and other professionals.
Austin said his buyer only came to look at his house because the interest rate was below market.
“I know 100 percent that the only reason this house was sold, especially during that period, was owner financing—that's what they told us,” he said.
Seller or owner financing gained popularity in the 1970s and 1980s when interest rates were sky-high, but it got a bad reputation for not having enough protections, especially for buyers. Federal regulators have criticized the model to exploit low-income buyers with high interest rates on substandard homes in poor areas.
However, as mortgage rates have risen sharply since 2022, the creative financing strategy has regained popularity despite remaining a niche offering. According to Realtor.com, this practice is becoming increasingly common in luxury home sales. 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 patchy thing that happened to really cheap properties and really underqualified buyers, and now the median price is in line with the price of the overall market,” said Joel Berner, senior economist at Realtor.com. “So it's moving into the high end of the market, becoming more common, happening on higher value properties.”
Seller financing is becoming more common in luxury home sales by wealthier buyers and sellers. Mario Tama/Getty Images
Benefits 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, usually lasting about three years, gives the buyer time to wait for rates to drop and find a traditional mortgage. Meanwhile, sellers can gain an advantage in the market and profit from the interest on the loan.
Sellers often use a financing strategy to sell a home that isn't selling. Both buyers and sellers can benefit from faster terms and avoid fees, including mortgage origination and appraisal costs.
“At its best, seller financing provides genuine value,” said Ryan Leahy, founder of MORE Seller Financing. “Sellers often retain more capital and receive predictable income, while qualified buyers benefit from payments that can be significantly below market rates.”
But the practice can be financially and legally risky without proper protection. Leahy said seller financing can have “many pitfalls and risks if done incorrectly.” He said his firm helps protect both parties by educating them on the process, ensuring the agreement complies with the law and connecting them with all necessary professionals, including mortgage originators, lawyers, title companies and other servicers.
It's more popular among wealthier people in part because the deal “requires the seller's financial stability and liquidity,” Boerner said, while the buyer must “be able to either change what's holding them back from getting a mortgage in three to five years or significantly lower rates in three to five years.”
But while this type of financing has gained popularity, it remains a niche practice. Fewer than 1% of home listings mention private financing, Boerner said.
MORE deals are on higher-end homes, which typically range from $800,000 to $3 million, Leahy said. Sellers typically have enough cash and equity in their property that allows them to wait several years before receiving the full amount of money from the sale of the home. MORE-approved buyers are often self-employed with income that is difficult to account for, making it difficult to qualify for a mortgage.
“There are so many people who are self-employed or have income that doesn't qualify for a traditional mortgage, which means you have influencer income, cryptocurrency income, side hustle income,” Leahy said. “Seller financing isn’t going away.”
When another MORE client turned to seller financing to sell his multimillion-dollar home in Austin, Texas, he realized his potential buyers were faced with another conundrum. They could afford to buy a house with cash, but preferred to invest their money elsewhere to avoid high interest rates.
James S., who wished to remain partially anonymous to protect his privacy, eventually sold his 5,200-square-foot home for $2.9 million in January 2025, giving the buyer a three-year loan at an interest rate of 5.5%.
“It’s always a question of whether to pay cash for a house or use that money for other things,” he said. “People could take the money and invest in the stock market, they could go into other business ventures.”
James and his wife also didn't need all the money from selling their house right away. They haven't bought a new home yet and are instead living in furnished short-term rental apartments in California while they figure out their next steps.
“My mortgage is being paid off,” James said. “And we make a little money a month too, so that’s good too.”
