Sell Your Home With Seller Financing
You carry the note and we pay you over time. Here is how it works, how it is taxed, and who it is not right for.
What is seller financing when you are the one selling?
Seller financing means you sell the house and take payments instead of the whole price at closing. You are the seller and you are also the lender. Clever Key Group is the buyer, and we make the payments to you. There is no bank in the middle, which is the entire point: no underwriting queue, no lender appraisal, and no financing contingency that can collapse the deal three weeks in.
Title transfers to us at closing, the same as any other sale. What you keep is a promissory note, which is our written promise to pay, and a mortgage or deed of trust recorded against the property, which is what lets you foreclose if we do not pay. That recorded lien is the difference between an agreement and a secured investment.
You may also see seller-financed deals written as land contracts or contracts for deed, where the seller keeps legal title until the final payment. Those are different instruments with different rules, and some states restrict them. It is not the structure we use, but it is worth knowing the difference exists so you can confirm which documents are actually in front of you.
Clever Key Group is the buyer in these transactions, which means we have a financial interest in your decision. We are not your attorney or your CPA. Have your own real estate attorney read the note and the security instrument before you sign either one.
How It Works
Four steps, and you know every number in advance.
We Agree on Terms
Price, down payment, rate, monthly payment, term, and balloon. All of it in writing before you commit.
You Get Paid at Closing
The down payment lands the day we close. Any existing mortgage is normally paid off right here.
You Hold the Note and the Lien
You keep the promissory note and a lien recorded against the property. That lien is your security.
You Collect Monthly
We pay you monthly for the agreed term, then the remaining balance as the balloon at the end.
The three ways you get paid
Every seller-financed offer we make is built from these three parts.
At closing
Down payment
Cash in hand the day we close, the same as any other sale.
Every month
Monthly payment
A fixed amount for the agreed term, split between interest and principal.
End of term
Balloon
The remaining balance, paid in one lump sum when the note matures.
The size of each part is negotiated, and the whole schedule goes in writing before you decide anything. We do not publish example numbers here, because an illustration from the party that would be making the payments is not a useful basis for your decision.
Why would you do this instead of taking the cash?
The case for carrying a note, and the honest benchmarks it has to beat.
The comparison worth making is against what a lump sum would actually earn sitting somewhere else. As of the FDIC's National Rates and Rate Caps effective July 20, 2026, the national average deposit rates were 0.38% for savings, 0.65% for money market accounts, and 1.68% for a 12-month CD. The 10-year Treasury constant maturity rate was 4.75% on July 31, 2026, according to the U.S. Department of the Treasury. Those are the benchmarks a seller-financed note competes against.
Be clear-eyed about what that comparison leaves out. A savings account and a Treasury bond hand your principal back on demand and carry federal insurance or the full faith and credit of the United States. A note secured by one house does not. It is uninsured, it is illiquid, and it depends on one borrower continuing to pay. The extra yield exists because the extra risk is real, which is why the sections below are not a formality.
How is a seller-financed sale taxed?
Under the federal installment method, the gain is generally recognized as principal payments arrive rather than all at once in the year you sell. That is the main tax argument for doing this. The method applies automatically to a qualifying sale unless you affirmatively elect out, and electing out means reporting the whole gain in the year of sale no matter when the money actually shows up.
Interest is treated completely differently. The interest portion of each payment is ordinary income in the year you receive it, reported separately from the gain on the sale. It does not qualify for the home-sale exclusion and it does not get long-term capital gains rates. Practically, that means the split between principal and interest in your note is not a cosmetic detail, and it is not something the contract's own labels control: if a note does not carry enough stated interest, the IRS recharacterizes part of the stated principal as interest anyway.
Three things routinely surprise sellers, and each can produce a tax bill in year one with no cash to pay it. If the property was ever a rental or you claimed a home office, depreciation recapture is ordinary income taxable in full in the year of sale and cannot be spread over the installments. If we were to take the property subject to an existing mortgage that exceeds your installment sale basis, the excess counts as a payment received that year even though no cash changed hands. And the balloon gets no special treatment when it lands: the principal is a payment received that year at the same gross profit percentage set in the year of sale, which for many sellers makes the balloon year the largest tax year of the note.
This is general information about federal tax law, not tax advice. State income tax treatment of installment sales varies and is not covered here. Your actual result depends on your basis, your depreciation history, your filing status, and your state. Run your own numbers with your own CPA or tax attorney before choosing between a seller-financed sale and a cash offer.
Can you seller-finance a house that still has a mortgage?
This is the question that stops the most deals, and the answer depends entirely on how the sale is structured. The clean version: your existing loan is paid off in full at closing out of the down payment and other closing funds, the lien is released, and you carry a note secured by a new first-position lien. Once the old loan is gone there is no lender left with a right to accelerate anything. That works whenever the funds at closing cover the payoff.
If the existing loan stays in place instead, you are in due-on-sale territory. The federal Garn-St Germain Act, 12 U.S.C. 1701j-3, defines a due-on-sale clause as a contract provision authorizing a lender, at its option, to declare the loan due and payable if any part of the property or an interest in it is sold or transferred without the lender's prior written consent, and it lets lenders enforce that clause even where state law would otherwise prohibit it. The statute does list transfers a lender may not accelerate on, and they are situations like death, divorce or separation settlements, certain transfers to a spouse or children, and putting the property into a living trust the borrower still benefits from. An ordinary sale to a third-party buyer is not on that list.
Read that plainly. If your mortgage is still in your name after you convey the house, your lender can call the whole balance due, and the demand arrives addressed to you rather than to the buyer. The loan also keeps reporting on your credit and keeps counting against you when you go to buy your next home. Whether a particular lender would actually exercise that right is a different question from whether it has the right, and neither one is something we can answer about your specific loan.
Whether your mortgage contains a due-on-sale clause, and what happens if your lender exercises it, depends on your loan documents and your state's law. This is general information, not legal advice. Talk to your own attorney before agreeing to any structure that leaves your existing mortgage in place.
Does it matter that the buyer is a company and not a family?
It matters more than almost anything else on this page, and it is the reason most of what you will read elsewhere may not apply to you. Nearly every seller-financing explainer online is written for a homeowner carrying a note for a consumer who is buying a house to live in. That is consumer credit, and it pulls in the Truth in Lending Act, Regulation Z, ability-to-repay requirements, and the loan originator rules.
Clever Key Group buys for business purposes, as an investor, not as someone moving in. The Truth in Lending Act carries a statutory exemption for business credit at 15 U.S.C. 1603, which provides that the subchapter does not apply to credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes, or to extensions of credit to organizations. Regulation Z implements that exemption at 12 CFR 1026.3(a). The practical effect is that the consumer-mortgage rulebook generally does not attach to a note you carry for us.
Be precise about what that means, though, because it is easy to hear it as good news and stop listening. An exemption takes protections off the table; it does not add any. It also does not touch state law, so it does not displace state usury caps, state licensing rules, or state statutes governing seller financing, all of which vary. And whether credit is primarily for a business purpose is a question of actual facts, not something the parties settle by writing a label on the note.
Whether any federal exemption applies to your specific sale depends on the facts and on the law of your state. This is general information about a federal regulation, not legal advice, and Clever Key Group is a party with an interest in the transaction. Consult your own attorney before agreeing to carry a note.
What happens if the buyer stops paying?
There is no automatic reversion. The house does not come back to you by itself. You hold a lien, and turning that lien back into a house means using your state's foreclosure procedure, on your state's timeline, at your expense. That is the single most important sentence on this page.
How long that takes is set by state law, and the spread is enormous. According to ATTOM Data Solutions' Mid-Year 2026 U.S. Foreclosure Market Report, published July 15, 2026, properties that completed foreclosure nationally in the second quarter of 2026 had been in the process an average of 563 days. Within that same report, state averages ran from 155 days in Texas and 173 in Wyoming to 2,007 days in New York and 3,491 in Louisiana. Those are averages of cases that happened to finish in one quarter, drawn largely from institutional mortgage foreclosures, so treat them as a sense of scale rather than a prediction. The only timeline that matters to you is your state's.
Costs stack up while that clock runs. You may end up advancing property taxes and hazard insurance to protect your own collateral. The property's condition can deteriorate while you have no control over it. Contractors the buyer hired can file mechanics liens. And in some states, purchase-money anti-deficiency rules limit or eliminate your ability to pursue the buyer personally for a shortfall, which can leave the property as your only recovery. None of this is exotic. It is the ordinary shape of what being a lender means, and it is the reason the note pays more than a savings account.
Foreclosure procedure, redemption rights, deficiency rules, and timelines are state law and vary widely. Clever Key Group would be the borrower on this note, so we are not a neutral party in describing your remedies against us. Talk to a real estate attorney licensed in the state where the property is located before relying on any of this.
Who should not do this?
We would rather tell you now than have you find out in year three.
You need the full amount soon
Seller financing turns a lump sum into a stream. If the money is spoken for, a down payment on your next house, a medical bill, or debt costing you more than the note will earn, take the cash. Notes can sometimes be sold later, but they sell for less than the balance, we cannot tell you what price you would get, and selling the note can accelerate the very tax you were spreading out.
You could not absorb a gap in payments
Ask it plainly: if payments stopped for a year while a foreclosure ran, and you were covering the property taxes and insurance in the meantime, would you be all right? If the answer is no, the total number does not matter. This is the wrong structure for you.
The tax picture works against you
If the property was a long-held rental, depreciation recapture is due in the year of sale whether or not you received the cash. If your gain is already covered by the home-sale exclusion, the installment method may be solving a problem you do not have. And you will be filing Form 6252 every year for the life of the note.
You want to be finished
Some people want the money and want to close the book. Carrying a note keeps you attached to the property's risk until the last payment clears. Wanting to be done is a completely legitimate answer, and a cash offer is the better product for it.
Seller financing, a cash offer, or a traditional listing?
None of these is universally better. A traditional listing usually brings the highest headline price for a move-in-ready home in a healthy market: the national median existing-home sale price was $440,600 in June 2026, according to the National Association of Realtors. A cash offer trades some price for speed, certainty, and an as-is sale. Seller financing sits between them, producing the largest total over time while keeping you attached to the property's risk until the note is paid off.
Median existing-home price from the National Association of Realtors (June 2026). Commission average from Clever Real Estate's February 2026 agent survey; time-to-close for a financed listing from ICE Mortgage Technology and the National Association of Realtors. Tax timing describes the federal installment method and depends on your own facts. Foreclosure timelines are set by state law and vary widely.
The right way to decide is to get all three numbers and compare net proceeds on a timeline, not list prices. If you want the lump-sum version first, start with our guide to selling your house for cash, then come back and put the two side by side.
Seller Financing: Frequently Asked Questions
The questions homeowners actually ask before carrying a note, answered straight.
What happens if the buyer stops paying?
Nothing automatic. The house does not revert to you on its own. You would enforce your lien through your state's foreclosure process, which takes time and costs money. Nationally, properties that completed foreclosure in the second quarter of 2026 had been in the process an average of 563 days, according to ATTOM Data Solutions' Mid-Year 2026 U.S. Foreclosure Market Report, and state averages in that same report ranged from 155 days in Texas to 3,491 days in Louisiana. Your state's law is the only timeline that matters to you, and a real estate attorney licensed there is the right person to ask.
Can I still sell this way if I have a mortgage on the house?
Often yes, when the existing loan is paid off in full at closing and the lien is released. If it stays in place you are in due-on-sale territory. Under the federal Garn-St Germain Act, 12 U.S.C. 1701j-3, a lender may enforce a due-on-sale clause when the property is sold or transferred without its prior written consent, and the transfers that statute protects are things like death, divorce, and transfers into a living trust. An ordinary sale to a third-party buyer is not among them. That risk lands on you rather than on us, so bring your loan documents to your own attorney before going further.
Do I pay tax on all of it in the first year?
Usually not on the gain. Under the federal installment method the gain is generally recognized as principal payments come in rather than all in the year of sale, and that method applies automatically unless you elect out. Interest is treated differently: the interest portion of every payment is ordinary income in the year you receive it, and it does not qualify for the home-sale exclusion. There are also exceptions that can create a tax bill in year one with no cash to pay it, including depreciation recapture on a property that was ever a rental. This is general information, not tax advice. Have your own CPA run your actual numbers.
Who holds the title in a seller-financed sale?
In the structure Clever Key Group uses, title transfers to us at closing and you hold a promissory note plus a mortgage or deed of trust recorded against the property. That recorded lien is your security. Some seller-financed deals are written instead as land contracts or contracts for deed, where the seller keeps legal title until the final payment. That is a different instrument governed by different state rules, and it is not what we use. Have your attorney confirm which one is actually in front of you.
What interest rate would I charge?
It is negotiated between us, but there is a federal floor. If a seller-financed note does not carry enough stated interest, the IRS applies the applicable federal rate test and recharacterizes part of what the contract calls principal as interest anyway, so writing a low rate to convert interest into capital gain does not work. Those rates are republished every month, so the one that applies to your contract has to be checked for the right month. For market context, Freddie Mac's Primary Mortgage Market Survey put the average 30-year fixed mortgage at 6.66% for the week ending July 30, 2026, though that is a consumer, owner-occupied benchmark rather than the pricing on a business-purpose note. What you may legally charge at the top end is set by state usury law, which varies.
Can I sell the note later if I need the money?
There is a secondary market for seller-financed notes, and two things are true about it. Notes generally sell for less than the unpaid balance, and we cannot tell you what price you would actually get. Selling the note, gifting it, cancelling it, or even pledging it as collateral for a loan can also accelerate the deferred gain and trigger the tax you were spreading out. If there is a real chance you will need the full amount early, take the cash offer instead.
What happens at the balloon if you cannot pay it?
The balloon is the remaining balance due in a single payment at the end of the term. If it cannot be paid, the realistic options are to renegotiate, extend the note, or begin foreclosure. The balloon gets no special tax treatment either: the principal counts as a payment received that year at the same gross profit percentage set in the year of sale, so for many sellers the balloon year is the largest tax year of the whole note. It is worth deciding in advance how you would want to handle that moment.
How do I know this is not a scam?
Fair question, and we are not the right people to answer it. Every commitment is in writing before you sign: the down payment, the monthly amount, the term in months, the balloon, and the lien recorded in your county's land records. Take those documents to your own attorney and your own CPA, not ours. Any buyer who discourages you from doing that is telling you something. We will also put a straight cash offer on the same property next to it so you can compare the two side by side.
Get both numbers, then decide
Tell us about the property and we will put a cash offer and a seller-financed offer side by side, with every term in writing. No obligation, and no pressure to pick the one that suits us.
Get My Free OfferPlease note: everything on this page is general information about federal law and national market data, current as of August 1, 2026. It is not legal, tax, or financial advice, and it does not describe the law of any particular state. Figures change, and the rates, medians, and foreclosure timelines cited here carry the dates on which they were published. Clever Key Group would be the buyer and the borrower in any seller-financed transaction described here, so we are not a neutral party. Before accepting or declining any offer, have your own attorney and your own CPA review your specific situation.