Financial Education through Real Estate Investing: Creative Financing — Seller Financing through AFS (Part 5)

September 6, 2022
What the A the F the S?!
Upon first glance, it seems like a new tool but it actually isn’t. Often times, when you use the acronym of AFS — Agreement for Sale — with people that are not educated nor active in the real estate transaction world, they will think it stands for a simple purchase agreement.
Well, they’s got that part right! The biggest difference is that an AFS — Agreement for Sale — (I’m just going to use AFS from now on so the word count doesn’t get fudged here) permits the Buyer to have a longer than usual closing period.
First thing first, this particular way of structuring a deal falls under the same premise that the Seller and Buyer align on a fundamental level like the ones previously discussed and illustrated: neither are in need of a quick (or standard) closing timeline. This is simply another way to obtain seller financing for buyers who may be able to leverage it to create win-win situations for both parties.
Again, I want to emphasize this: just because creative financing sounds cool and obtaining seller financing makes an investor sound smarter than usual does NOT mean seller financing is a fit in every situation and every deal.
Before going any further, I want to share this quick comparison chart to differentiate the 3 ways to leverage seller financing so far:

In the next article, we will look at the complete comparison so you can get the complete view of the differences. This way, we can just focus on AFS today.
As both a buyer and a seller in different situations, I have to admit: AFS is my least favourite form of seller financing. However, it’s not without its merits.
Let me share my very first AFS “deal” with you. Spoiler alert: I was neither the buyer nor the seller in this case!
An Unusual Compensation
Picture it: Edmonton, May 2012 (Yes…still watching the Golden Girls…). On a not particularly eventful day, I got a call from a commercial realtor that I had the chance of sharing my baby strategy (Lease Options) once at a networking event. He began to share with me that he has a client wanting to sell his 7-bay industrial property just outside of Edmonton (Alberta). This client of his also found out that one of his tenants that runs a auto body shop business wants to buy it but does not have the liquid cash to execute on it.
The realtor thought of me apparently because of how excited and passionate I was when I shared with everyone at that networking event about how creative financing is helping a 30-year old exit a 6-figure corporate job soon. And sure enough, 2 months after that, I declared Financial Freedom #1. The date was July 25, 2012. You will never forget the day you declare financial freedom.
Alright, back to the story…
This is literally how I remember parts of how that conversation went:
Realtor: Yeah…I recall you mentioning that you can help people buy properties with little to no money down?
Me: Well…yes (not knowing exactly what he was looking for yet).
Realtor: Well, I got this situation here that I’m hoping you can help with. And I don’t know how you’ll be paid but I trust you’ll figure that out.
Me: Sure. Happy to help! What’s the ‘situation’?
Look, the premise is simple here:
- Seller wants to sell and is not in a huge rush
- Buyer wants to buy and is lacking the financial means right now
There’s alignment! All I ended up doing is educating both the buyer and seller on VTB and figuring out which method is the best for both parties.
At the end of it all, we landed on using AFS and that was an ah-ha moment for me as well since I’ve been partial towards Lease with the Options to Purchase up to this point.
The Buyer was committed! He had a whole business plan about:
- How he was going to expand his business over the next 3 years taking up all 7 out of the 7 bays,
- How he was going to build more bays to rent it out once he takes up all 7 existing bays,
- How he had been waiting for an opportunity like this since he was a little boy and learning how to ‘tinker’ with his Dad’s Oldsmobile (THAT got to me and the Seller)
So, here’s the big ah-ha I took away and continue to apply today: when I know for sure that I want to acquire a specific property but lack the complete financial resources to satisfy traditional lending, I will use AFS. This means that — on a scale of 1 to 10 (10 being the highest) — I want this property at a level 10. Although, to be completely honest, these days I do have the privilege to gather my resources necessary to close on most deals having spent over a decade building up a reputation within the industry. Regardless, it’s a lesson that I will never lose and always share.
For those of you who are wondering exactly how this all got put together, here’s your favourite part:
- A 5-year long AFS was created by a lawyer after an initial Letter of Intent to align the Buyer and the Seller’s goals (bonus: with the option to extend another 2 years if the Seller needed it)
- The Seller agreed to a symbolic downpayment and offered a competitive interest rate for the balance
- The Seller’s main focus was the monthly cashflow (income from the Buyer’s monthly payment) as he was a retiring landlord
- The Buyer successfully grew his auto body shop business and business income as planned
- In fact, Buyer was ahead of schedule by almost 2 years but chose to continue to stay in the original agreement for the full 5-year term as a thank-you to the Seller so that the income would continue for him
- The Seller was happy with 60 payments during the AFS and happily walked away with a lump sum when the Buyer made the balloon payment at the end (did I mention the tax advantages the Seller got out of this deal? No? Well…I’ll have to share that next!)
- The Buyer paid for the Realtor’s commissions for the ‘Sale’ as part of the Agreement with the Seller
For me, the Buyer also wanted to pay me for my ‘knowledge and expertise’ and I refused. This was one of the BEST EXPERIENCES I have ever had as a real estate investor leading up this point. Little did I know that this passion to educate opened up another door for me 2 years later when I began to train and mentor others globally since 2014.
In the end, I did get a huge gift card from the Realtor. Huge enough that I could buy a brand new Dyson vacuum with it. Yes, I enjoy cleaning and love a good vacuum.
So, here you have it. While AFS is not my favourite from a technical standpoint, it has its way of making a deal work. As mentioned (and kind of like everything else in life these days), when I really want a property, I will use AFS as my acquisition strategy.
At this junction, I truly do hope that you are also starting to see the power of financial education. It has nothing to do with the ‘investment type’ or ‘asset class’ that matters. It has everything to do with your level of financial literacy.

For those of you who are in and close to Toronto, ON — Trust Your Talent is running a 2-day LIVE IN-PERSON Real Estate Investing Bootcamp on September 24 & 25 where you will dig into this particular strategy amongst many others. You can visit the Bootcamp Registration page or talk to a Strategy Coach from Trust Your Talent Academy to learn more.

Tomy dedicated readers, I thank you for your support and feedback. If this is the first time you’re reading one of my publications, I hope you’ve enjoyed it and learned a thing or two. If so, please share a clap here!
If you’re wanting to be a part of a community of active real estate investors from around the globe, here is the T.A.L.E.N.T.ed Investors Facebook Group. It’s a place where people come together to share experiences, knowledge, successes and challenges, and money making opportunities!
For those of you who prefer watching videos, here is the YouTube channel where some of my work (very raw) has been shared.

Lastly, I just want to say thank you for your continuing support. I aim to be authentic and adding value to your life.
It’s ultimately about LIFE and I appreciate you coming on this journey with me!
(Written at home in Edmonton, AB)