• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer
NoteInvestor.com Logo with House next to words

Note Investor

How to buy, sell, broker or invest in private mortgage notes for cash flow!

Your #1 Source For
Note Investing Information!

  • Home
  • About
  • Articles
    • Notes 101
    • Note Brokers
    • Note Buyers
    • Real Deals
    • Seller’s Corner
    • Cash Flow Business
  • Learn
    • Sell Your Mortgage Note
    • Note Broker Training
    • How To Buy Notes
    • Note Buyers Directory
    • Creating Notes With Seller Financing
    • Note Investing 101 Series Videos
  • Bookstore
  • Contact

Owner Financing – 10 Advantages to Using the Seller Carry Back

July 19, 2009 by Tracy Z 3 Comments

seller-financing-prosThe word is out and seller financing is on the rise as buyers and sellers look for creative ways to finance property in the struggling market.

So what’s all the hype? Here are ten advantages to using the seller carry back to buy or sell real estate.

1. Shorter Marketing Times – Properties marketed with “Owner Will Finance” will draw a greater response rate and generally sell at least 20% faster than properties requiring conventional financing.

2. More Buyers – With many lenders’ tightening their approval process, the seller carry back enables a greater number of buyers to purchase and finance a home.

3. Speedy Closings – Without the red tape of a conventional mortgage lender, a real estate transaction can close in as little as two to three weeks.

4. Maximize Selling Price – The seller has an opportunity to realize full market value for a property when providing financing. This is viewed as a sales concession in many markets.

5. Reduced Restrictions – Restrictive lending requirements don’t apply providing greater flexibility when it comes to the buyer’s credit history, down payment, debt to income ratios, and other underwriting criteria.

6. Fewer Costs – There are no expensive loan costs to worry about. A buyer can put the money they save on origination fees, points, underwriting fees, mortgage insurance premiums, and junk fees towards the down payment and building equity.

7. Interest Income – The seller is able to collect long-term interest since they are essentially acting as the bank by extending terms to the buyer. On average a buyer will pay back 2 to 3 times the amount of the mortgage on a 30-year term as a result of interest.

8. Installment Sale Tax Deferral – When property is sold at a gain and subject to tax there can be an opportunity to delay a portion due when reporting under the Installment Sale Method (Refer to IRS Publication 537, Form 6252 and speak to a qualified tax professional for further details).

9. Secure Asset – The balance of the purchase price is collateralized by the property. If the buyer stops making payments the seller can take back ownership of the home.

10. Liquid Asset – The seller owns a liquid asset, which is just a fancy way of saying somebody will purchase the note, mortgage, trust deed, or contract on the open market. Many sellers elect to sell their future payments to a note investor or note buyer for cash today rather than payments over time.

Seller financing offers a creative solution to financing real estate but there are some risks. For the flip side of the coin be sure to read the The Downside of Owner Financing – Disadvantages to Providing Financing. It also pays to consult with qualified real estate, tax, and legal professionals to make sure today’s solution doesn’t turn into tomorrow’s problem.

Author: Article written and copyrighted by Tracy Z. Rewey

Filed Under: Seller's Corner Tagged With: advantages to owner financing, creative financing, find note buyers, How to Owner Finance, installment sale, sell mortgage note, seller financing

About Tracy Z

Tracy combines her knowledge of real estate notes with the power of marketing online to help grow your business! She can be reached at Tracy@NoteInvestor.com or by calling 1-888-999-7905.

Reader Interactions

Comments

  1. Alyssa says

    January 10, 2019 at 9:17 pm

    Dear Tracy,

    Can you please tell me what are the advantages of buying a note for RE, vs. buying the property “Subject To” the existing mortgage?

    Thanks,
    Alyssa
    New York

    Reply
    • Tracy Z says

      January 16, 2019 at 5:06 pm

      Hello Alyssa, Fred wrote a pretty good article on buying notes vs real estate at: https://noteinvestor.com/buy-notes/invest-in-real-estate-or-mortgage-notes/

      Reply

Trackbacks

  1. Seller Financing is What the Real Estate World Needs Now! | Note Investor says:
    March 29, 2011 at 1:31 pm

    […] Owner Financing – 10 Advantages to Using the Seller Carry Back […]

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Learn Real Estate Notes

Click the reports below to download your FREE copy of 5 Ways to Cash in on Notes AND a BONUS!

Search This Site

More to See

Investing Notes Risk

21 Tips To Read Before You Get Started Investing in Notes

Note Buyers Directory 2018 by NoteInvestor.com

Selling Mortgage Notes? Find the Right Note Buyer!

Learn Note Business

Learn the Note Business in 60 Seconds?

Cash Flow Notes Business Truth

5 Myths About the Cash Flow Notes Business

Most Read Note Buying Info

How To Buy Mortgage Notes
Creating Notes With Seller Financing
Note Broker Training
Get Direct With Note Buyers Directory
How Can I Find Cash Flow Notes?
Buying and Selling Notes For Residual Income
How Dodd Frank Mortgage Laws Apply to Seller Financing
How To Calculate Cash Flow Notes
Note Investing 101 Series Videos
Best of Notes 2022

Connect With Us

  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube

Footer

Places to Visit

  • Creating Notes
  • How To Buy Notes
  • Note Broker Training
  • Note Buyers Directory
  • Sell Your Note
  • Bookstore

We Are Here to Help

Photo of Fred Rewey and Tracy Z of NoteInvestor.com
Fred Rewey & Tracy Z NoteInvestor.com

Receive the Note Investor Newsletter

COPYRIGHT © 2008-2023 NOTE INVESTOR | PRIVACY POLICY | CONTACT US
This website is for informational purposes. This is not an offer to sell or purchase any security. Nothing is intended as legal, financial or investment advice. Any historical data represents past performance and does not guarantee future results. NoteInvestor.com is owned by Diversified Investment Services, Inc.