Please explain how Seller Financing works?

The Seller becomes the bank, basically. Instead of the bank holding the note on the property, the Seller holds the note and the buyer makes payments to the Seller instead of the bank. The Seller still has the property as collateral for the loan if the buyer defaults. The differences may be the amount of downpayment the Seller may want, the interest rate the Seller charges, amortization period, term of the loan, etc. In most cases there is a trade-off between the interest rate charged by the Seller and the less stringent requirements as opposed to the bank: you may pay a little more interest to the Seller, but you may have a lower downpayment and/or less red tape.

As a buyer, you may have some areas to negotiate such as interest rate; amortization period; and of course down-payment or price. I would suggest hiring a seasoned attorney and commercial broker. Some lattent deffects may be present for example, if industrial property - contamination is an issue. Ask for Phase 1 report. Also, any incumberances/liens on property such as mechanic's or tax liens. To the question though, you can negotiate price;terms,down-payment; interest rate.

In the commercial market of 2009, Seller financing will trump typical commercial bank lending for no other reason than it is readily obtainable. A commercial lender may need 90-120 days to fund the loan. If a purchaser has the required equity, a Seller is likely to offer a loan without a credit report, a personal guarantee or an appraisal in 30 days or less.
NZ
Commercial Broker
Monarch Beach, CA