Direct cash purchase
The most straightforward investor structure. Existing liens and mortgages are typically paid through closing and the seller receives the agreed net proceeds.
Seller financing
The seller may agree to receive part of the purchase price over time under negotiated terms. This can create flexibility, but it also changes risk and tax considerations.
Existing-financing structure
In certain circumstances, a transaction may be structured while existing debt remains in place. This is different from a formal assumption and requires careful review of lender terms and risk.
How do you know which structure is better?
There is no universal answer. A seller who needs a clean payoff next week has different priorities from a landlord with strong low-rate debt who wants a higher price over time. The best structure is the one whose risks and benefits the parties actually understand.
- How much cash do you need at closing?
- How much equity is in the property?
- What is the current loan balance and interest rate?
- How quickly do you need to close?
- Is income over time more valuable than a lump sum?
- What legal, tax and lender restrictions apply?
Complicated financing should never be explained with a slogan.
Loan assumptions, due-on-sale clauses, seller carryback notes, servicing, insurance and title all matter. We encourage sellers considering a nonstandard transaction to use qualified legal, tax and closing professionals.