Why buyers love owner financing. There are very tangible benefits buyers see in owner financed deals.
Why sellers refuse owner financing. There are real and perceived risks that make most sellers slow to accept owner financed deals.
A case study of a buyer who defaulted on an owner financed deal. An owner of Brain Host sold his shares on an owner financed agreement. I’ll cover what he did when the buyers defaulted on his payments.
How sellers have a lot of leverage in owner financed deals. Despite the risks to a seller, buyers actually risk more in an owner financed deal.
How to craft an owner financed deal that is safe. Seller financing can be beneficial to both the buyer and the seller. I’ll close with some tips on crafting an owner financed deal that is safe and beneficial for everyone.
Seller Financing Makes a Lot Of Sense For a Buyer
While it is no secret that most buyers like deals that have an element of seller financing, why buyers love seller financing is also not a secret.
First (and most obviously), a seller willing to extend a note on a deal requires you bring less cash to the closing table. Since you are buying a business which is (presumably) bringing in income, the business can literally pay off a portion of its own acquisition price. This gives you, the buyer, leverage to buy a larger business with less money down.
Second, most buyers who require seller financing do so to keep the seller involved and invested in the future success of the business. While you may be able to plan a smooth transition, it is nice to have a seller invested in issues that might crop up in the future.
Finally, many buyers see sellers who are willing to offer financing as someone confident in the future success of their businesses. Whether or not a willing seller is truly a bellwether of a business’s stability is a debatable point.