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Sellercarryback is quickly becoming a much-needed form of financing for purchasing real estate and cash flow notes. Due to the restrictions of traditional lenders, many sellers are offering this non-traditional financing option in order to attract more buyers.

Using sellercarryback, the property owner finances all or a portion of the purchase price. In most cases, the buyer provides a small down payment toward the purchase. The buyer makes note payments directly to the seller throughout the term of their contract.

Seller carry back financing is completely legal and is documented using a promissory note and real estate note. Promissory notes document the purchase price, down payment, monthly payment amount, interest rate, and closing date of the contract. Real estate notes document vital information regarding the sellercarryback transaction.

Property owners offering seller carry back financing earn profit from the property sale through monthly payments and accrued interest. Most sellers require the buyer to provide a down payment of 3- to 10-percent when entering into owner financing agreements. In most cases, the down payment is non-refundable.

Some real estate investors offer partial sellercarryback financing and require the buyer to obtain traditional lending for the remaining balance. In cases of partial financing, the seller will carry 5- to 50-percent of the purchase price. Doing so allows the buyer to more easily obtain financing because they do not need to finance the full amount.

Buyers will pay two payments – one to the seller and one to the lending source. The sellercarryback note is usually paid off within three to five years, while the mortgage note to the lender typically extends for 20- to 30-years.

Investors who offer seller carry back mortgages and seller carry back trust deeds can sell the notes to other investors. Both real estate and business notes can be sold in whole or part, depending on the financial needs of the investor.

Investors in need of funds for additional investments might sell part of their promissory note, while investors who need to liquidate their assets would sell notes in their entirety. When notes are sold in whole, terms of the note remain the same. However, payments are sent to the buyer of the note.

When notes are sold in part, payments transfer to the note buyer until the contract ends. Payments then revert back to the original note holder. For example, a real estate investor needs $10,000. He holds real estate notes valued at $50,000 with a maturity date of 5 years. He could sell one-fifth of the note value to another investor in exchange for a lump sum payment. After 12 months, the payments would revert back to the investor.

In today's recessed economy, numerous creative financing options are sprouting up. Our real estate article library contains dozens of up-to-date articles on investing, creative financing techniques, promissory notes, mortgage notes and personal money management. We invite you to discover a wealth of knowledge to expand your investment portfolio.