Christian OsgoodCEO, Multifamily Strategy · CEO at Multifamily Strategy

The BIGGEST Risk of Seller Financing?!

15 Feb 2024 · 0 min

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0:21

In this segment of his YouTube video, Christian Osgood outlines the primary risks associated with seller financing. He explains that the seller essentially negotiates with themselves, meaning there is no independent bank underwriter to safeguard against a poorly structured deal. While seller financing can allow for more favorable terms, the increased control also places greater responsibility on the seller. If the seller is inexperienced, miscalculates the numbers, or makes operational errors, they can incur substantial financial liability.

What's the downsides or the risk to seller financing? So seller financing comes with some extra risks. There's one big one: you're negotiating against yourself. If you do a bad deal, there's no bank underwriter who's going to protect you. Now, you can also write a better deal than a bank. You have more control, which comes with inherent risk, because if you are a bad operator or you're not good at running your numbers or you're new, you can make a big mistake and be on the hook for it.