What is seller financing? The seller takes the lender's place for part or all of the price, carrying a promissory note secured in Nevada by a recorded deed of trust.
Seller financing is a sale in which the seller stands in for the lender on part or all of the price. The buyer pays a down payment at closing and then pays the seller in instalments under a promissory note. In Nevada the usual structure is the one a bank uses: the deed passes to the buyer at closing, the buyer is the recorded owner from the first day, and the note is secured by a deed of trust recorded against the home. That is the difference that matters from a contract for deed, where the seller keeps legal title until the last payment and the buyer holds nothing the county record can see. It is also called owner financing, or a seller carry-back where the seller carries only part of the price behind a bank's first loan.
The terms are whatever the two sides write, which is both the appeal and the risk: the down payment, the rate, the amortization schedule, and whether a balloon ends it early. A common shape on a $400,000 home is 20 percent down, $320,000 carried above what a bank is quoting, amortized on a thirty-year schedule so the payment stays ordinary, and a balloon at five years by which the buyer refinances or sells. Federal rules constrain this where the buyer is a consumer buying a home to live in. A seller financing three or fewer properties in twelve months is exempt from the loan originator rules only if the loan fully amortizes, which rules a balloon out, and only if the seller makes a good-faith determination that the buyer can repay. A natural person, estate or trust financing a single property in twelve months is exempt on easier terms and may write a balloon. The distinctions are fine enough to be worth a lawyer rather than a summary.
Two things break these deals. If the seller still has a mortgage, that loan's due-on-sale clause is triggered by the transfer, and a wraparound, where the buyer pays the seller and the seller keeps paying the bank, leaves the buyer depending on a lender that could call the loan and a seller that could stop forwarding the money. And someone has to service the note: collect, apply interest, hold the escrow for taxes and insurance, issue the annual statement, and reconvey when it is paid. If the buyer defaults, a Nevada seller holding a deed of trust has the same non-judicial power of sale under NRS 107 that a bank would, which is what makes the structure workable here. Kouzr does not arrange or broker financing; what it can show is the county record these notes land in, a deed of trust with a person rather than a bank as the beneficiary.
A worked example
A seller owns a $400,000 home free and clear and carries the financing. The buyer puts $80,000 down and signs a $320,000 note at 7.5 percent, amortized over thirty years with the balance due in five. Principal and interest come to about $2,238 a month. After sixty payments the balance has fallen to roughly $302,800 and is due in a single payment, met by refinancing with a bank or by selling. Over those five years the seller has collected about $117,000 in interest and has held a recorded deed of trust against the home the entire time.
Find the deed of trust on the county record
Questions people ask
Why would a seller finance a house?
It widens the pool of buyers and spreads the proceeds out. A seller who owns the home outright and does not need the cash collects interest on money that would otherwise sit in a bank account, and can often sell faster, or at a better price, to a buyer a lender has turned down.
Can you sell a house with seller financing if you still have a mortgage?
It is done, but the existing loan's due-on-sale clause gives the lender the right to call the balance when title transfers. A wraparound works around that in practice rather than in law, and the risk sits with the buyer, whose payments depend on a seller continuing to pay the bank.