2018 Seller Financing Data and Stats

In 2018 the number of new seller financed notes created increased by 2% while the dollar volume of residential notes was up nearly 20% over 2017.

Overall there were 91,605 first position owner financed notes, totaling $25.9 billion.

The average Loan-to-Value for newly created residential notes was 81% LTV, with commercial at 75% LTV, and land at 74% LTV.

“We have seen a definite increase in the notes created since last fall. My customers have reported more sellers are responding than typical for late spring and summer.

Residential loan volume is up nearly 20% over 2017. It appears that increases in conventional mortgage rates last fall may have triggered more seller carry notes.” comments Scott Arpan of Advanced Seller Data Services.

5 Key Seller Carry Statistics For 2018

  1. $9.59 billion in seller financed notes were created on residential properties compared to $7.9 billion in 2017.  While commercial and land had a much lower number of transactions, the dollar volume was still sizeable at $5.49 billion and $7.37 billion respectively (with the balance being an unknown property type).
  2. The average loan size for residential seller carry-backs increased 5.4% over 2017, from $184,992 to $195,062.
  3. Texas, Florida, California and Arizona remained the top 4 states for usage of seller financing (based on count).
  4. The top ten states created nearly 69% of all seller financed loans for the year.
  5. The number of multi-note creators was on the rise – 82% of sellers carried one note, while 7% carried 2-3 notes, and 11% carried 4 or more (in a 12 month period).

The Seller Financing Cycle

The installment sale has been around for decades and is a common choice for properties or buyers that have challenges qualifying for traditional bank loans. Seller financing most recently grew in popularity after the subprime meltdown and then started to decline in usage after 2014 as conventional lending stabilized.

Now many real estate investors are starting to incorporate seller financing into their buy/sell models contributing to the increases in 2018.

Usage of Seller Financing From 2010 to 2018

Year 2010 2011 2012 2013 2014 2015 2016 2017 2018
Count 70,159 89,439 103,313 110,979 116,178 105,871 97,089 89,779 91,605
Change +27.5% +15.5% +7.4% +4.7% -8.9% -8.3% -7.5% +2%

Number Of Notes Created by Property Type

The number of notes created by property type (from records where property type is known).

2015 % 2016 % 2017 % 2018 %
Residential 56,881 54% 47,651 49% 42,916 48% 49,169 54%
Commercial 14,841 14% 14,467 15% 13,930 16% 13,484 15%
Land 12,215 12% 11,784 12% 13,417 15% 12,176 13%
Unknown 21,934 21% 23,187 24% 19,516 22% 16,777 18%
105,871 97,089 89,779 91,605

Top 10 States For Seller Financed Notes In 2018

The Top 10 states for the creation of seller financed notes made up 68.91% of the overall volume.

State 2018 Count Percentage
Texas 20,768 22.67%
Florida 9,540 10.41%
California 9,393 10.25%
Arizona 4,364 4.76%
North Carolina 4,157 4.54%
Georgia 4,036 4.41%
Washington 3,814 4.16%
Oregon 2,541 2.77%
New York 2,395 2.61%
Pennsylvania 2,126 2.32%
Top 10 63,134 68.91%
All 50 States 91,605

Single Note Creators Vs. Multi Note Creators

The number of sellers creating multiple notes in 12 months has increased. One contributing factor could be an improved understanding of the Dodd Frank Act including RMLOs willing to assist with the disclosures, documentation, and ability to repay qualifications.

2014 2015 2016 2017 2018
Seller Created 1 Note* 102,227

88%

90,078

85%

78,616

81%

76,675

85%

75,116

82%

Notes From Sellers Creating More Than 1 Note* 13,951 15,793 18,473 13,104 16,489
Totals 116,178 105,871 97,089 89,779 91,605

These 2018 statistics were provided by Advanced Seller Data Services, a mailing list provider for note investors and brokers. Stats are based on 2137 counties reporting, $30,000 or greater balance, and 1st position or wrap/AITD notes.

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.

Comments

  1. As a buyer where can I find a very good template to draw up a document requesting seller finance win win terms.

  2. Michael Morrison says

    Hello Tracy,

    Thank you for an excellent informative thorough presentation on data from the Note Industry.
    All the Best!!!!!
    Michael F. Morrison

  3. Awesome article Tracy. Exciting! Thank you.

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