Clavesta
Sign in / Sign up

Sell & invest vs. seller-finance

Thinking about carrying the note when you sell? Compare the income you’d earn in the first year from two paths: selling for cash and investing the proceeds, or seller-financing the home and collecting monthly payments. You’ll also see the buyer’s monthly payment and any balloon.

Everything runs in your browser. Nothing you type is sent anywhere.

By Clavesta Editorial Team · Updated

Educational information, not legal, tax or financial advice.

Your numbers

The sale

What you paid plus improvements. Used only to show your gain.

For example a CD or Treasury yield. Applies to the cash-sale proceeds and to the down payment. Check current rates.

If you sell for cash

With agents on both sides, typically about 5.2%–5.7% (Clever, Aug 2026; Redfin, Q3 2025). Selling directly, enter 0.

Title, transfer taxes and fees you pay as the seller.

If you seller-finance

The rate you and the buyer agree on.

The term the monthly payment is figured over.

Leave blank for a note that’s paid off over the full term.

Your year-1 estimate

Results appear here once the calculator loads.

How this calculator works

  1. Selling for cash. We subtract the commission and other closing costs from the sale price. What’s left is the cash you’d invest. One year of earnings at your chosen rate is the year-1 income.
  2. Seller financing. The buyer pays the down payment at closing, and you invest it at the same rate. The rest becomes a note the buyer repays with a level monthly payment, the same way a standard mortgage works. The interest in the first 12 payments is your note income.
  3. The balloon. If you set a balloon, we show the balance still owed at that point. The buyer pays it in one lump sum, often by refinancing.

The math comes from the same engine Clavesta uses in its app, so the numbers match. Amounts are rounded to the cent.

What this leaves out

  • Default risk. Buyers who use seller financing are often ones a bank turned down.
  • Liquidity. Your money is tied up in the note. Notes can be sold, usually at a discount.
  • Inflation, which shrinks the value of fixed payments over a long term.
  • Taxes, and your own costs to set up and service the note.
  • Years after the first: note interest falls as the balance is paid down.

Selling directly: costs and savings

The cash side above assumes a traditional sale with agents. Selling directly on Clavesta, with cash or bank-loan buyers or with seller financing, there’s no listing commission to pay: the listing side alone typically runs about 2.76% of the price (Clever, Aug 2026). You still pay closing costs to the providers you choose, typically about 1%–3% of the price for sellers, not counting commission (Redfin, 2026).

Frequently asked questions

Does seller financing earn more than selling and investing the cash?

It can, because a note secured by your home usually pays a higher rate than a CD or Treasury, and you skip most of the sale commission. But the extra income comes with default risk and less access to your money. This calculator compares year-1 income only, so weigh those risks alongside the numbers.

What is a balloon payment?

A balloon is the remaining loan balance that comes due in one lump sum on a set date, often after 5 to 10 years, even though the monthly payment was figured over a longer term such as 30 years. Buyers usually refinance or sell to pay it. If they can’t, you may need to extend the note or take the home back.

How is income from a seller-financed note taxed?

The interest you receive is generally taxed as ordinary income, the same way interest from a CD is taxed. The principal part of each payment may be partly or fully tax-free, depending on your gain and whether you qualify for the home-sale exclusion. Our home sale tax calculator shows how that works, and a CPA can confirm it for your situation.

What happens if the buyer stops paying?

A seller-financed note is secured by the home, not guaranteed. If the buyer defaults, you generally keep the down payment and payments already received and can foreclose to take the property back. Foreclosure takes time and money, and the rules and timeline vary by state.

Can I charge any interest rate I want?

No. Rules set limits on both ends. IRS imputed-interest rules can apply if the rate is below the applicable federal rate, and state usury laws can cap the maximum. Federal lending rules may also limit balloon terms and require a licensed loan originator, depending on how many homes you seller-finance.

What rate should I use?

Clavesta doesn’t recommend a rate. You and the buyer agree on one. Seller-financed rates are often near or above current bank mortgage rates, because the buyer is getting flexibility a bank won’t offer. Try a few rates to see how the comparison changes.

For sellers

Sell directly and keep the commission

Create a free account to see buyer interest near your home and which ways to sell fit your mortgage: cash or bank loan, a buyer taking over your loan, or seller financing.

  • Free, no obligation
  • Your address stays private
  • Verified buyers only
Get started