Sold: The Return of Seller Financing for Commercial Real Estate?

Despite the credit crisis and the general lack of credit from third-party lenders, owners of commercial real estate assets may need or desire to sell those assets and generate liquidity in their portfolios in the near term. “Seller financing,” a transaction in which the seller makes a secured loan to the buyer to finance a portion of the property’s purchase price, may provide a means to bridge the financing gap facing buyers and sellers of commercial real estate assets in today’s market. We explore the practical, strategic, economic, legal, and tax issues that sellers and buyers of commercial real estate assets should consider when deciding whether to engage in a seller- financing transaction.

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