5 Owner Financing Tips for Sellers

In an effort to sell fast and stand out from the crowd, sellers are turning to the owner financed installment sale. By accepting payments over time from the buyer, the seller provides an alternative to bank financing. This attracts more buyers and helps the owner get attention in a market flooded by oversupply from foreclosures.

Of course sellers don’t want to jump from the frying pan into the fire by trading a house that won’t sell for a buyer that won’t pay.

Here are 5 safety tips for sellers considering an owner carry contract:

Tip #1 – Review the Buyer’s Credit

How buyers have paid bills in the past is a good indicator of how timely they will make future payments. Always review the buyer’s credit prior to accepting a promise to pay. Sellers can obtain a signed authorization from the buyer to pull credit through a reporting agency, or the seller could simply ask the buyer to obtain a copy of his or her report for the seller’s review.

Tip #2 – Get a Down Payment

The more money a buyer puts down, the more “skin” they have in the deal. The greater this equity, the lower the likelihood the buyer will stop paying.

When people have little to no equity, they are more likely to default or just walk away from the home. Few sellers want the hassle of taking back a property through foreclosure, so increase the odds in your favor by requiring a down payment.

Tip #3 – Set the Terms

The terms include interest rate, payment amount, frequency, and the due date for payment in full. There are also late fees, default clauses, requirements for insurance, and other standard provisions.

While the terms can be whatever the buyer and seller agree upon, it makes sense to set terms that are affordable to the buyer AND favorable to a note investor. This way a seller is more likely to own a note that is valuable to an investor in case they ever want to sell future payments for cash.

Tip #4 – Get Help with the Documents

In addition to putting the terms in writing, the documents evidence the lien. The obligation to pay (or IOU) usually takes the form of a promissory note, which is secured by an owner mortgage or trust deed recorded in the county records. A land contract or real estate contract are also used in some states. A qualified attorney or title company familiar with local laws should prepare the closing documents.

Tip #5 – Collect Payments Like a Pro

Tracking the payments, interest, and balance is often referred to as servicing the note. In addition to collecting payments, a servicer should verify the real estate taxes and insurance are kept current. The seller can perform servicing but it is a whole lot easier to hire a third party company to handle this process.

If you are looking for the complete system for safe owner financing be sure to read our how-to manual. It includes documents, examples, terms, credit reading tips, note investor criteria, and lessons learned from 20 years of real life experience.

Here is what one satisfied reader said:

“Your product is one of my go-to programs. I am glad you took the time to put it together. I think I paid more than 10x when it first came out and I think it was worth every penny!”  Greg G – Canyon Capital

Available today in our bookstore as part of Finding Cash Flow Notes  for just $297

Article written and copyrighted by Tracy Z. Rewey at www.NoteInvestor.com.

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.


  1. hi tracy,do you know what a seller should ask for on a church when owner financing.thanks regina reginajeff34@ahoo.com

  2. David Baccus says

    Can you elaborate on owner financing and the SAFE Act?
    I’m I good to go in Texas?

  3. Do you have a third party servicer you can recommend for seller financing?

  4. Is the “owner financing note training system” you referred to, the same as the $99 ebook?


  5. Hello Lynn,

    The owner financing note training system and ebook provide marketing examples for letters, postcards, and brochures. We also have a script for Reverse Ad Marketing that works well with FSBO’s. It comes with our 100% satisfaction money back guarantee.

    All the best,

    Tracy Z. Rewey

  6. Tracy,

    In your ebook, do you have sample letters/postcards to send to FSBO’s to suggest to them to sell with owner financing? If not, can you send me some examples of what (and what NOT) to say?



  7. Tracy. A question, unrelated, what do you know about facebook, twitter,linkedin, etc. in relation to advertising your business, webpage etc.; to get your face and name out there? If it is a good idea how do you go about it?
    Thank you for any help.

    • Hello Fred! We have used all three social media outlets to market our business. Out of the three you referenced, my first preference is linked in followed by targeted facebook. Twitter is still experimental and we are testing to find the best way to make it effective in the professional business arena.


  1. derekf22 says:

    […] owner financing real estate notes sell mortgage notes This entry was posted in Uncategorized. Bookmark the permalink. ← Hello world! LikeBe the first to like this post. […]

  2. […] Another option is to forget the snail mail and start building an email list. Visitors to your web site can opt-in to receive your free monthly eletter. To encourage participation offer a free downloadable report, with helpful tips on increasing the value of their real estate note. […]

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