Question 1

Why does the down payment count on the financing side?

Accepted Answer

Because it's money the seller collects at closing either way — leaving it out of the seller-financing total would understate what that path actually delivers, and bias the comparison toward the cash offer.

Question 2

What reinvestment rate should I assume?

Accepted Answer

Whatever you can realistically and consistently earn on the payments as you receive them — a savings account, a bond ladder, or the market, depending on your risk tolerance. Higher assumed rates favor whichever side pays out sooner (usually cash), so don't assume an aggressive rate without meaning it.

Question 3

Does this account for the risk the buyer stops paying?

Accepted Answer

No — this is a pure future-value calculation assuming every payment arrives on schedule. It intentionally ignores default risk, which is a real and separate consideration for seller financing.

Lump sum now, or payments over time — which is worth more later?