Much depends on where your property is located and how robust the market is. The fact is that many potential buyers have sufficient cash flow to service a loan or we have also met many who are waiting on an inheritance.

If the market is robust, there would be little advantage to offer seller financing unless you would rather receive the money over time. 

When the market is slower, it could give you an advantage. When a buyer comes with a cash offer during slower times, they will more than likely be negotiating hard on the price. But if a buyer comes who is dependent on partial financing to be able to buy, they are more likely to be willing to pay more for your property in exchange for you helping them. 

To clarify, by partial financing, we mean that you, as the seller, receive a certain percentage of the total property price up front, e.g., 50%, and then collect the rest in payments over time. In contrast, (full) seller financing means that you as the seller will be accepting payments for the entire amount due.

So in the scenario of a buyer needing assistance to purchase, if you are willing to offer partial financing for 1-5 years with interest, you don’t need to accept a lower price. An additional bonus is that your home will be one of the few options available to those buyers who are short on cash.  

The location of your property also plays a role in deciding to offer partial financing. As a general rule, properties that are well located and in excellent condition are the ones that sell first, while those homes that are in a less than ideal location and/or condition are harder to sell. Every year our agency sees many potential buyers arrive who want to purchase now but don’t have all of the money they need. This group is limited to either looking only for the few properties that offer partial financing or looking at homes priced way below their preferred budget. So if your home falls into the less-than-ideal location and/or condition, it could receive a lot more attention if you were to offer partial financing. 

Do note, however, that there’s a huge difference between offering partial financing and agreeing to fully finance the purchase of your home.

For example, it may be fairly safe to extend financing to someone whose parent has recently died and they can prove that in the next 12-24 months they will receive a substantial inheritance, or who has more than ample cash flow. On the other hand, it may feel too risky to extend financing to someone who you discover is already overburdened with debt.

Although we have seen a few homes successfully financed and amortized for a 10 -15 year period, most are more like a bridge loan for a shorter period of time.  

The portion financed can be paid with interest only payments and a balloon payment at the end of the term. Or, for example, the loan would be amortized as though it were for 15-20 years, but a balloon payment will be due at the end of the term.

The downside is that if your contract has been poorly written, Mexican law will favor a non-paying buyer and limit the damages you can collect if you have to take the property back.  So it is important to ensure that the deal is structured well and that the contract is air-tight so that you are protected if the buyer ends up not fulfilling their side of the deal.  

We would recommend that you first spend some time with the buyer wanting you to offer financing and decide if you feel comfortable with them and their financial situation.  

Unless you know the buyer personally, we generally recommend financing only if the buyer can come up with 50% or more as a down payment and the terms fit your needs and goals.  

If you are considering offering partial financing we also recommend that you come in and talk to one of our brokers who has experience structuring this type of deal.