What is referred to as 'purchase money' in real estate?

In the context of real estate, 'purchase money' refers to funds provided by the seller to assist the buyer in completing the transaction. This often occurs in the form of a purchase money mortgage or seller financing, where the seller acts as the lender for part of the purchase price. This arrangement can aid buyers who may not be able to secure traditional financing or who may wish to negotiate more flexible terms directly with the seller.

This practice can be beneficial for both parties: the seller can potentially sell their property more quickly and under more favorable terms, while the buyer can access the funds needed to acquire the property. This kind of financing is important because it can help bridge gaps in traditional financing options and create a smoother pathway to closing the sale.