When Eric Rewitzer and his wife Annie Galvin decided to move out of San Francisco after 30 years in the city, they found their dream home in Amador County. It was just what they were looking for — 13 acres of land with a timber frame home and a little art studio — but they couldn’t afford it.
Two months later, in January 2019, a woman wandered into their San Francisco gallery and revealed that she was the owner of that home they loved. She had had a good feeling about them, she said, and the home still hadn’t sold. She asked if they were still interested and offered new terms. Most notably, she’d be the bank.
What she proposed, which ultimately led to a successful sale, is called seller financing. It’s a lesser-known home financing option where a seller and a buyer bypass a traditional bank loan in favor of a direct loan. In a competitive and expensive housing market like California’s, coupled with the relatively high mortgage rates now, buyers are looking for creative ways to get into the real estate market. For sellers, looming tax implications might make an unconventional deal an attractive option, especially if the other option is not moving at all. Direct loans like these can even mean a lower interest rate, and for some prospective homeowners, such as those who have poor credit, they might be the only way to get a loan at all…