Not too long ago I had a client who was ready to walk away from a deal she had worked on for two months. The buyer could not get approved. The seller would not come down on price. Everyone had thrown their hands up. But we got it done, and we did not use a bank to do it. That deal is the reason I keep writing and talking about this topic, because most people have no idea how many options are actually sitting on the table.
The market we are in right now rewards that kind of thinking. The old playbook, the one where you just call your lender, fill out the paperwork, and show up at closing, does not work the way it used to. That is not doom and gloom. It is just reality, and once you accept it, things actually start to open up.
What happened to the market?
Rates. That is the short answer. For a few years there, you could borrow money for a home at around 3%. People were buying, refinancing, moving around freely. It felt sustainable but it was not. Those rates were an emergency measure, not a new normal, and they are gone. I will say it plainly because I think some people are still waiting for them to come back: they are not coming back. Not in any reasonable timeframe.
The average rate today is sitting around 6.78%. On paper that looks like a moderate number, but what it means in someone’s monthly budget is a different story. Move from a 3% mortgage to a 7% one on a median-priced home and you are looking at roughly $1,000 more a month. Every month. That is not a minor adjustment. Spread that across the country and what you get is about 18 million people who could have qualified for a mortgage a few years back who simply cannot today.
Lenders tightened up too. Defaults started climbing, debt levels were already high, and banks responded the way banks always do: they got more selective. Better credit scores, more documentation, less room for anything that looks like a risk. Deals that would have closed easily in 2020 are getting denied or delayed now.
I talk to sellers who are frustrated that they are not getting offers. I talk to buyers who cannot believe what their monthly payment would be. Both groups are dealing with the same market. They just feel it from opposite ends.
The part most people skip over
When I bring up creative finance, people want to jump straight to the tactics. What is a subject-to deal? How does seller financing work? Those are fair questions and I am happy to get into them with clients, but I have seen people learn every tactic in the book and still stumble because they skipped the part that actually matters.
The part that matters is being willing to have an uncomfortable conversation. To walk into a negotiation and say, look, the traditional route is not going to work here, so can we think about this differently? A lot of people cannot bring themselves to do that. They worry about seeming inexperienced, or they assume the other side will just shut it down. Sometimes they do. That is fine. No deal ever died from someone asking a question.
Creative finance is just a name for the collection of ways you can fund a real estate deal without going through a conventional mortgage lender. Seller financing, lease options, private money, wraps, there are quite a few of them. No single approach works for every deal. What does carry over from deal to deal is the mindset of treating financing as something negotiable rather than something fixed.
A no is also not permanent. I had a seller turn down a creative offer flat in the spring. By fall, the home had been sitting for six months with nothing happening. He called back. We worked it out. Now, when someone circles back like that they can go one of two ways: cooperative because they finally understand their position, or difficult because their ego got bruised along the way. You cannot always predict which one you will get. Just go in without expectations and do not take either outcome personally.
One more thing on this: if you have never structured a creative deal before, please work with someone who has. These are not complicated once you know what you are doing, but there are details that can hurt you badly if you get them wrong. I have seen people lose real money over things that were entirely preventable.
Sellers are sitting on more leverage than they think
Here is something I do not think gets said enough. Sellers have a real advantage right now if they are willing to be flexible about how they get paid. Most listings are sitting there waiting exclusively for buyers with conventional bank approval. That pool is genuinely smaller than it was. A seller who opens the door to other financing arrangements, seller financing in particular, is suddenly competing in a different league.
With seller financing, instead of a bank collecting the monthly payments, you do. You set the terms, you collect the interest, and your property becomes accessible to a buyer who could not get traditional approval but is otherwise solid. Done right, it can actually be a better financial outcome than a straight sale.
Done wrong, it is a headache you did not sign up for. The finish line in seller financing is not the contract signing. It is the last payment or the refinance that clears your balance. If the buyer stops paying at month ten, you are dealing with foreclosure proceedings, legal bills, and months of carrying a property that is not generating income. I am not saying this to scare anyone off. I am saying it because the way to avoid it is doing serious due diligence on the buyer upfront, more than you would in a regular transaction. Verify everything. Then verify it again.
Where this leaves you…
Every time the real estate market goes through a rough patch, you see the same split. Some people dig in, decide it is too hard, and wait for conditions to change. Others figure out what the new conditions actually require and keep moving. I know which group tends to come out ahead.
The conventional mortgage is not dead. For buyers with strong credit and stable income it still works well. But for the millions who have been priced out, and for sellers who are watching their listing age on the market, waiting around for normal to return is not a strategy. Getting curious about what else is possible, that is a strategy.
I keep coming back to this topic because I have watched it change outcomes in real time. Deals that were finished, where both sides had already mentally moved on, came back together because someone asked whether there was another way to structure things. Not always. But enough times that I stopped being surprised by it.
The market changed. That part is settled. What you do from here is the only part still up for debate.
