In a seller financing agreement, who is responsible for determining the interest rate?

In a seller financing agreement, the interest rate is determined through negotiation between both the buyer and the seller. This mutual agreement allows both parties to come to a consensus that reflects their individual perspectives on the value of the financing arrangement and the current market conditions.

In a seller financing scenario, the seller acts as the lender and, therefore, has a stake in setting the interest rate. The buyer, on the other hand, will likely have preferences or limits based on their financial situation. Hence, the interest rate is not dictated by any external authority, such as TREC (Texas Real Estate Commission), nor can it be solely established by one party without the input of the other.

This collaborative determination aligns the interests of both the buyer and the seller and is crucial for ensuring that both parties are satisfied with the terms of the financing agreement.