When that happens the Seller gets the full purchase price in cash at closing. The Lender gets a promissory note and a security interest in the property. When you sell property on your own its important to know in advance if a bank will make a loan on the property. Then contact a loan officer at a bank and ask if they can pre-qualify your property. In other words, you find out in advance if there are any major problems which will inhibit a lender's interest in making a loan to help a Buyer buy your property.
Buyers can also be pre-qualified for a loan.
This is an important thing for Sellers to consider. When a Buyer tells you he will have to get a loan to buy your property ask if he is pre-qualified. If he is it means the chances of your transaction closing are much better. It no fun to sign a purchase and sale agreement, then wait 4-6 weeks for your buyer to seek a loan, only to find out that he can't get the necessary funds. That means you may have lost all that valuable marketing time.