Seller’s Note – What Does It Mean?

A seller’s note is used to allow a property owner to sell a property and offer some level of terms to the buyer to finance the property. The terms may be for all or part of the purchase price. They are considered contractually secured against the property, like any other mortgage.  

Are they common?

The use of a seller’s note is not an everyday practice for most investors. They are more prevalent with land deals, sellers in distress, and commercial properties. The bottom line, when appropriate, attractive seller financing can make a deal happen when the sale is likely in danger or there is no interest in the property due to current market conditions, value or cash flow potential. 

Seller’s Notes from 40,000 Feet

From 40,000 feet, a seller’s note is a disadvantage for the seller because they have to take payments over time to reclaim their equity. Because of this, to get a Seller funded deal to happen, the seller will often require a higher purchase price and interest rate. 

There are some risks for everyone but there is slightly more risk for the seller overall. Because of the risk, many sellers won’t carry a note since there is not a big enough reward. Add to this the fact that, most investors sell a property to get capital to invest in other real estate ventures. Therefore, the availability of a seller’s note as a lending tool is narrow. However, there are areas of the market where they are more frequent. 

For the buyer, seller financing may not be attractive due to a higher purchase price and or interest rate, not to mention the prospect of a huge balloon payment. 

When a Seller’s Note Make Sense

Seller financing is often defined by buyers that are not able to get enough money to finance a deal without help. However, this is not always the case. Many medium and larger-scale strategic transactions involve some seller financing. Seller financing can be complementary, making both the seller and buyer more comfortable. 

Should I Entertain a Seller Note?

Sure, if the deal is right for you as the buyer or the seller, by all means. Hopefully, the terms are beneficial and equitable for both parties. Although they can be, a seller note is not typically a scam. I would consider them a tool used to make a real estate property sale happen. 

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Abbey Mortgage Will Buy Your Seller’s Note

If you are carrying a note that you would like to cash out of, we can help. We have helped many people over the years, and we can help you too. We are a private lending and investment company, which allows us to make fast decisions as well as quick funding. There is no board to make decisions, the person who makes the decision is Robert Kearney, the owner of Abbey Mortgage and Investments. Call Robert today to discuss how Abbey Mortgage can help you get the cash you need.