According to Advanced Seller Data Services, note creation is up 37.1% from this time in 2011 to 2012. It is up 57.7% from 2009 to 2012. Over 90% of these seller carryback notes are now created by sellers who create only one note.
My experience in talking with hundreds of sellers every year confirms the 90% figure. With tough lending standards expected to tighten further because of increased capital requirements for all banks, more and more seller carryback and private money transactions will take place. This is good news because it allows people to buy and sell homes.
But there is a lot of bad news as well. Many sellers don’t know what they are doing when they sell a property using a seller carryback. Or even worse, they get bad advice. What I mean is that many of these transactions have very weak terms, terms that do not protect the seller. Terms that hurt the seller should he later decide to sell his note. Wish I could talk to every one of them before they create their note. I can’t, it’s impossible. So, I write a blog like this one, write a Newsletter, and try my best to help educate people.
If you or someone you know is contemplating the use of a seller carryback, call me before you sit down with your buyer. I will try to give you good, sound information that will protect you. You can decide what to do with that information.
