{"id":300765,"date":"2026-05-05T12:52:07","date_gmt":"2026-05-05T12:52:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/300765\/"},"modified":"2026-05-05T12:52:07","modified_gmt":"2026-05-05T12:52:07","slug":"the-homebuying-workaround-more-californians-are-considering","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/300765\/","title":{"rendered":"The homebuying workaround more Californians are considering"},"content":{"rendered":"

When Eric Rewitzer and his wife Annie Galvin decided to move out of San Francisco<\/a> after 30 years in the city, they found their dream home in Amador County. It was just what they were looking for \u2014 13 acres of land with a timber frame home and a little art studio \u2014 but they couldn\u2019t afford it.\u00a0<\/p>\n

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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\u2019t sold. She asked if they were still interested and offered new terms. Most notably, she\u2019d be the bank.\u00a0<\/p>\n

What she proposed, which ultimately led to a successful sale, is called seller financing. It\u2019s 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\u2019s, 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<\/a>. 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.\u00a0<\/p>\n

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When a deal like this works out, it can be the perfect ending for both parties.\u00a0<\/p>\n

\u2018Just people being good to each other\u2019<\/p>\n

Rewitzer, Galvin and the seller settled on a $100,000 down payment, a six-year loan with monthly payments at a 3% interest rate, and a \u201cballoon\u201d payment (a large lump sum) at the end. A lawyer, a mortgage broker and a real estate agent reviewed all aspects of the deal, protecting both parties should anything go wrong. In 2025, Rewitzer and Galvin made that final payment, and the trio went out to lunch, \u201cand we just congratulated each other on a deal that really worked,\u201d Galvin said.<\/p>\n

\"Annie\u00a0Galvin,<\/p>\n

Annie\u00a0Galvin, left, and Eric Rewitzer\u00a0at their home in Amador County, Calif.<\/p>\n

Courtesy of Eric Rewitzer<\/p>\n

Rewitzer said he doesn\u2019t think many people realize this type of financing is even an option \u2014 they hadn\u2019t. \u201cIt really was a great experience and just people being good to each other,\u201d Rewitzer said.\u00a0<\/p>\n

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\u201cShe was like our fairy godmother,\u201d he said. \u201cBut we did her a huge favor too, of just being the people to step up and take over the responsibility for this.\u201d<\/p>\n

Now that Californians are staying in their homes longer than ever<\/a>, often because of financial concerns stemming from Proposition 13\u00a0\u2014 the state law that keeps property taxes artificially low\u00a0\u2014 or capital gains tax implications, he wishes more sellers knew about this practice. \u201cI know a lot of people in San Francisco wouldn\u2019t even consider it, but maybe it\u2019s something to consider,\u201d Rewitzer said.<\/p>\n

A once unconventional deal is getting more common<\/p>\n

Seller financing isn\u2019t very common in the California real estate market \u2014 most experts estimate it\u2019s around 6% of the market. But interest is growing, with one calculation showing seller financing deals increased by 8% between 2023 and 2024<\/a>.<\/p>\n

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San Diego Redfin agent David Zarraonandia said that\u2019s partially because many people don\u2019t know it\u2019s an option at all. \u201cA lot of agents are not going to pitch it just because they don\u2019t have the experience or familiarity with it,\u201d Zarraonandia said. \u201cAnd because the agents are not pitching it, the sellers don\u2019t really know their options.\u201d<\/p>\n

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An aerial view of houses in Pacifica, Calif.<\/p>\n

JasonDoiy\/Getty Images<\/p>\n

Zarraonandia completed a transaction recently that included seller financing. When it works out, it can be advantageous for both parties, he said, saying he told those recent buyers, \u201cYou guys just won the lottery on this deal.\u201d\u00a0<\/p>\n

This type of deal may especially appeal to sellers who don\u2019t want to take an immediate tax hit, so Zarraonandia always makes sure to tell his clients about it. \u201cIt\u2019s similar to getting rent, but you\u2019re just able to sell it to somebody else and create your own terms,\u201d Zarraonandia said.<\/p>\n

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Seller financing last gained popularity during the 1970s and \u201980s, when interest rates reached record highs. It\u2019s not surprising it\u2019s seeing a small resurgence. \u201cThe higher the rates get, I think it could become more and more common because the seller has a fantastic option to make really good money from an investment standpoint,\u201d\u00a0Zarraonandia said.<\/p>\n

The ups and downs of creating homeowners<\/p>\n

Still, seller financing won\u2019t likely ever become a mainstream alternative. \u201cThere\u2019s a lot more potential risks for both the buyers and sellers,\u201d\u00a0Zarraonandia said.<\/p>\n

The terms of these loans are often much shorter than a traditional mortgage, so a large balloon payment after a short time period can be cost prohibitive for buyers. Plus, the seller determines if a buyer qualifies and sets the interest rate, so the rate could be higher than a bank\u2019s rate.\u00a0<\/p>\n

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A real estate sign reads, \u201cShown By Appointment Only.\u201d<\/p>\n

Michael Vi\/Getty Images\/iStockphoto<\/p>\n

On the other hand, if the buyer defaults on the loan, the seller must initiate foreclosure proceedings, which are often expensive and lengthy. The seller would still be on the hook for any repairs needed as well. Then, they would need to go through the process of selling the property a second time. Even when a sale works out, a seller still has to pay taxes on the yearly income.<\/p>\n

Because of these financial complications, for a deal to work, it should still involve a mortgage broker, an attorney and a real estate agent, said San Francisco Compass agent Amanda Jones. \u201cYou can\u2019t shortcut the process,\u201d Jones said.\u00a0<\/p>\n

That said, Jones said she wishes more people knew about the option because, when both parties know what they\u2019re getting into, it can be mutually beneficial. \u201cOnce you know your finances and you have a really good tax reason, it makes so much sense to me,\u201d she said.<\/p>\n

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Seller financing isn\u2019t just for single-family homes, either. It can be used for vacant land or multiunit buildings, something Jones has experience with in San Francisco. One of her clients financed the sale of a 35-unit, tenancy-in-common<\/a> building a few years ago. She said the seller was in his late 70s and that it was a great experience. \u201cThe guy created homeowners,\u201d she said.<\/p>\n

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A house in downtown Julian, Calif.<\/p>\n

MattGush\/Getty Images<\/p>\n

Another client of hers knew his estate taxes would be too high if he sold, so he decided to finance several units he owned in Cole Valley to doctors and nurses who worked at UC San Francisco\u2019s\u00a0nearby Parnassus campus. She said he felt confident that type of buyer could be trusted, and his instinct was correct. He never had any defaults or late payments, according to Jones.<\/p>\n

She said the uncommon financing occasionally comes up these days with prospective buyers in the tech industry, who don\u2019t want to liquidate all their stock, but she noted that she hasn\u2019t actually completed a seller financing deal in the past few years. Still, Jones told\u00a0SFGATE, \u201cI definitely think it\u2019s a great option.\u201d<\/p>\n

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For Rewitzer and Galvin, the Amador County homeowners, it was more than luck that their deal worked out. It was a dream come true. \u201cAll of this came on the table because she was a motivated seller and we were motivated buyers and we had an incredible rapport,\u201d Rewitzer said. \u201cAnd she won, and we won.\u201d\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"When Eric Rewitzer and his wife Annie Galvin decided to move out of San Francisco after 30 years…\n","protected":false},"author":2,"featured_media":300766,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[101,103,102,104,106,105,3099,2787],"class_list":["post-300765","post","type-post","status-publish","format-standard","has-post-thumbnail","category-san-francisco","tag-san-francisco","tag-san-francisco-headlines","tag-san-francisco-news","tag-sf","tag-sf-headlines","tag-sf-news","tag-sfgcalifornia","tag-sfgrealestate"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/300765","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=300765"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/300765\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/300766"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=300765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=300765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=300765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}