Published by Acre Commercial (ACRE)  |  September 2026  |  Spokane, WA

Estimated read time: 7 minutes  |  Category: Investment Analysis

A Spokane Valley shop building went under contract three times in eighteen months. Each deal fell apart, and price was never the sticking point. Seller financing is what finally closed it.

Every buyer ran the same loan math, watched the deal miss its coverage test, and walked. Then a fourth buyer paid what the second one had offered and closed in forty days. What changed? The seller carried $600,000 behind the bank loan at 6%.

That story keeps repeating across the Inland Northwest. In early September 2026, bank loans on shops, offices, and warehouses run about 6.93% to 7.17% on five to ten year terms. CMBS money prices between 6.77% and 7.44%. SBA 504 quotes near 6.30%, and SBA 7(a) near 6.75%. Bridge debt costs 9.00%.

The Federal Reserve held its rate at 3.50% to 3.75% through late July 2026. The ten-year Treasury sat near 4.60%, and sticky inflation kept long rates high.

Acre Commercial works with buyers, builders, and business owners in Spokane, Spokane Valley, Kennewick, Post Falls, and Rathdrum. This guide covers the deal shapes closing right now, from seller financing to loan assumptions, plus the risk each one carries.

Why Bank Debt Alone Keeps Killing Good Deals

The building is rarely the problem. A steady Spokane strip center at a 7.4% cap throws off plenty of income on paper. The coverage test breaks the model.

Banks across Eastern Washington want 1.25 times coverage. At 7.00% on a 25-year payback, a $2,000,000 loan costs about $170,000 a year, so the test needs roughly $212,000 of net income. A building that throws off $200,000 carries a smaller loan than the buyer wants. Then the deal needs more cash or it dies.

Buyers answer by pushing the price down, and sellers who bought at 2021 values say no. So the region sits frozen, with sound buildings and thin volume. Seller financing breaks that tie more often than anything else.

How Seller Financing Works

Seller financing usually takes the shape of a carryback. The seller lends part of the price and takes a note backed by a second deed of trust. A common structure pairs a 65% bank loan with a 15% to 20% seller note, and buyer cash fills the rest.

Blended cost drops in a hurry. Pair a first at 7.10% with a seller note at 6.00% on a fifth of the price, and your blended rate lands near 6.88%. That can clear a test bank debt alone fails.

Sellers win more than a closing here. Note interest often beats what the cash would earn in the bank. On top of that, installment sale rules under Section 453 can spread the gain across the note term. That helps a lot in Washington, where excise tax already bites at closing. Talk it through with your CPA first, since opting out sometimes works better.

What a Seller Should Ask For

Seller financing makes you a lender, and sellers who skip that step end up sorry.

Ask for what a bank would want: signed guarantees, financial statements, tax returns, and a credit pull. Push for real buyer cash too. A buyer with a fifth of his own money in the deal acts nothing like one with a twentieth. Should the bank foreclose, thin equity wipes out a second note.

Set a shorter note term than the bank loan, often three to five years with a balloon. That forces the buyer to refinance you out once rates ease. Add a cross-default tied to the first loan, plus notice rights so you hear about trouble before a sale date. Check that the bank even allows a second loan, since many loan papers bar one.

Loan Assumptions and the 2026 Maturity Wall

Loans written from 2019 to 2021 carry rates far under today’s market, and a big pile of that debt comes due through 2026 and 2027. For a buyer, an assumable loan at 4.25% is worth real money.

Whether you can assume it rides on the loan papers. Agency apartment debt and many CMBS loans allow it, subject to lender sign-off and a fee near 0.50% to 1.00% of the balance. Bank portfolio loans in the Inland Northwest often carry a due-on-sale clause with no path at all, though some local lenders will talk.

Equity is the real wall. Picture a building bought in 2020 for $3,000,000 with a $2,100,000 loan. That balance may sit at $1,900,000 today while the value climbs toward $3,200,000. Taking over the loan then calls for $1,300,000 in cash, well past what fresh debt would need. So seller financing often fills that hole, stacked behind the old first.

Timing calls for patience too. Lender sign-off often runs 60 to 90 days, and your contract has to allow for that. A forced 45-day close cannot hold the process.

Master Lease With an Option to Buy

A master lease hands the buyer day-to-day control plus an option to buy at a set price inside a set window. The seller keeps title, and the old loan stays put.

Value-add buildings suit this shape well. Picture a buyer taking over a half-empty Spokane office building. Over two years he fills it. Once the income covers bank debt at a workable ratio, he exercises the option.

Both sides carry real risk. A buyer spends money on a building he does not own, so option wording and recording matter a great deal. A seller gives up control while he still owes the bank. So the lease has to set hard standards, reporting, and remedies. Have a lawyer draft it from scratch, because a due-on-sale clause can fire when a lease hands over too much of the ownership.

How to Raise Seller Financing With an Owner

Bring seller financing up early. An owner who has already fixed on a number and taken a beating hears a carryback ask as one more cut.

Frame the talk around yield. A seller who takes $2,400,000 in cash and parks it at 4.50% earns less than one who takes $1,900,000 plus a $500,000 note at 6.50%. Run that side by side, with the installment sale piece included. Then the talk turns from a cut into arithmetic.

Which sellers say yes? Owners with no 1031 target lined up sit at the top. Retiring business owners selling their own building come next. Estates with no clock and long-time holders with a low basis often play too. Funds with a fixed return date almost never do.

Seller Financing: Common Questions

What is seller financing in a commercial deal?

Seller financing means the seller lends part of the price to the buyer. He takes a promissory note backed by a deed of trust, usually in second place behind a bank loan. A common structure pairs a 65% bank first with a 15% to 20% seller note, and buyer cash covers the rest. The setup pulls down the buyer’s blended cost of money. So a deal that would miss a lender’s coverage test at today’s rates can still close.

What are commercial loan rates right now?

In early September 2026, loans on shops, offices, and warehouses run about 6.93% to 7.17% for five to ten year terms. Apartment loans over $6 million price better at 5.80% to 5.93%, while smaller apartment loans run 6.20% to 6.33%. SBA 504 quotes near 6.30%, and SBA 7(a) near 6.75%. Bridge money costs about 9.00%. Your actual quote turns on loan-to-value, coverage, building type, location, and your track record.

Can I assume the seller’s loan?

Only when the loan papers allow it. Agency apartment loans and many CMBS loans permit it, subject to lender sign-off and a fee near 0.50% to 1.00% of the balance. Bank portfolio loans often carry a due-on-sale clause with no path, though some local lenders will talk. The bigger wall is cash, since an older loan has paid down while the value has gone up. So plan on 60 to 90 days for sign-off and build that into the contract.

Is seller financing risky for the seller?

The risk is real, and good underwriting keeps it in check. A seller in second place can lose the whole note when a buyer defaults and the bank forecloses into thin equity. Protect yourself with real buyer cash, signed guarantees, full financials, a cross-default tied to the first loan, and notice rights on any bank default. Check as well that the bank allows a second loan before you agree to a thing.

Who should sell with owner financing?

Sellers with no urgent need for all the cash gain the most from seller financing. That group takes in retiring owners selling the building their company used, long-time holders with a low basis and a big gain, estates with no clock, and owners who have not lined up a 1031 target. Installment sale rules can spread the gain across the note term, and note interest often beats what the cash earns in the bank. A seller who needs every dollar to fund the next buy should hold out for cash.

How Acre Commercial Structures Deals at Today’s Rates

Acre Commercial has spent this cycle closing deals that bank debt alone could not carry. In Spokane, Spokane Valley, Kennewick, Post Falls, and Rathdrum, our advisors price the debt next to the building, since each one drives the other right now.

For sellers, we model what seller financing yields against a straight cash sale. That work folds in the installment sale piece and the note interest, so numbers drive the call. For buyers, we find listings with debt worth taking over, then shape offers around a real sign-off clock.

All the way through, we work with lenders, tax counsel, and closing attorneys. Creative deals fall apart on paperwork far more often than on math.

Contact Acre Commercial: 43560.com

Rates near 7% have not stopped deals in the Inland Northwest. They have changed which shapes work, and buyers who bend are trading today. The rest wait for a cut the Fed has not hinted at.

Bring a structure to the table, whether that is seller financing, an assumption, or a master lease. Then the talk about price gets much easier.