Why do some commercial property sellers insist on seller financing when a buyer can easily qualify for a bank loan?
When a property buyer approaches the commercial property seller to buy a property, he can use various financing options to pay for the property including taking a bank loan. The seller financing is better as it offers favorable rates to the buyer, the buyer signs a mortgage agreement and the seller handles the mortgage process as opposed to taking a conventional bank loan from the financial institution/banks.
Answer and Explanation:
In seller financing the commercial property seller acts as a lender. Seller financing allows the seller to sell the property more easily at a higher rate if return on their investment. This type of financing is important when the credit market is tight.The property buyer is able to benefit through the favorable rates and the fact that he does not have to produce a whole lot of documents to the bank to get a loan.
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from Corporate Finance: Help & ReviewChapter 8 / Lesson 7