2016 Seller Financing Statistics and Insights

Seller financing statistics reveal new note creation fell by 8.3% in 2016.

Seller Financing StatsOverall there were 97,089 seller financed notes created in 2016 compared to 105,871 in 2015.

The number of commercial and land secured notes dropped only slightly by 3% off 2015. The biggest change was seen in the single family residential (SFR or SFH) category of notes which fell 16% in 2016 from 2015. Why the big change?

“The drop in residential notes may have been due to hot residential markets allowing sellers to choose buyers capable of obtaining a conventional loan. This is part of the normal real estate cycle and not an indicator of a long term issue,” comments Scott Arpan of Advanced Seller Data Services.

7 Key Owner Financing Statistics For 2016

  1. Residential properties secured 64% of the of notes created in 2016, Commercial properties secured 20% and land secured 16%.
  2. The average starting balance was $152,921 for residential notes, $396,543 for commercial notes, and $246,185 for land notes.
  3. Most new notes came from sellers creating just one note. Single note sellers were responsible for 78,616 or 81% with sellers creating more than one note responsible for 18,473 or 19%.
  4. Top months for note creation in 2016 were June, March and April.
  5. The months with the fewest notes created in 2016 were November and October.
  6. The average maturity date of notes created in 2016 with known maturity dates is 10.25 years from the sale date.
  7. Texas, California and Florida were the top three producing states for seller financing with ten states making up 61.3% of the overall transaction volume.

Where Are We In The Seller Financing Cycle?

After the subprime meltdown, conventional lending tightened and it was tough for buyers to get financing. This contributed to 5 years of seller financing increases from 2009-2014. As real estate and lending markets stabilize so does the usage of owner financing.

Now many real estate markets are appreciating, interest rates are low, and credit is readily available. Seller financing levels are now similar to 2011-2012 as this graph helps visualize:
Seller Finance Graph 2017 Stats

Usage of Seller Financing From 2009 to 2016

Year 2009 2010 2011 2012 2013 2014 2015 2016
Count 60,035 70,159 89,439 103,313 110,979 116,178 105,871 97,089
Change +16.9% +27.5% +15.5% +7.4% +4.7% -8.9% -8.3%

Single Note Creators Vs. Multi Note Creators

While the number of “one-off” notes created is declining the number of notes from sellers creating multiple notes (in a 12 month period) continues to increase. This is an interesting statistic to track since most single note creators fall under an exemption to the Dodd Frank Act.

2014 2015 2016
Seller Created 1 Note* 102,227 90,078 78,616
Notes From Sellers Creating More Than 1 Note* 13,951 15,793 18,473
Totals 116,178 105,871 97,089
*2nd Note was created within 1 year of first note

Top 10 States For Seller Financed Notes In 2016

The Top 10 states for the creation of seller financed notes made up 61.3% of the overall volume.

State 2016 Count Percentage
Texas 17,871 18.4%
California 9,699 10.1%
Florida 8,958 9.2%
Washington 4,238 4.4%
North Carolina 3,840 4.0%
Arizona 3,750 3.9%
Georgia 3,322 3.4%
Ohio 2,949 3.0%
Oregon 2,470 2.5%
Tennessee 2,436 2.5%
Top 10 59,533 61.3%
All 50 States 97,089

 

These 2016 statistics were provided by Advanced Seller Data Services, a mailing list provider for note investors and brokers. Stats are based on 2132 counties reporting, $30,000 or greater balance, and 1st position or wrap/AITD notes.

Click Here To Download The PDF With Seller Financing Stats On All 50 States.

What are your thoughts on the recent statistics? We’d love to hear your feedback in the comment section below this article.

About Tracy Z

Tracy combines her knowledge of cash flow notes with the power of marketing online to help grow your business! She can be reached at Tracy@NoteInvestor.com 1-888-999-7905 or at Exposure One Marketing.

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