Consumer Credit Regulation: 4.4.6 Seller’s Points
A special method by which interest costs may be hidden in the sale price of goods or real estate is the use of “seller’s points.” Seller’s points occur most frequently in real estate transactions when the real estate seller, typically a builder, pays points to a bank or other lender in return for the lender’s commitment to issue “low-interest” loans to qualified buyers. Such an arrangement might appear to be a boon to buyers and, indeed, seller’s points would not be deceptive or usurious, if the seller did not recover its expense by raising the selling price of the real estate.