There are a lot of reasons that a person selling a property will agree to carry the note rather than cash out. Talking to colleagues in the note buying business, we pretty much agree that the following are the key reasons we encounter:
Sellers
1. More Buyers. A seller who is willing to offer owner carry increases the buyer pool for his property. The more buyers he has to choose from, the higher the odds he will find the right buyer.
2. Income Stream. Some sellers do not want or need cash. They prefer an income stream to supplement retirement or other income.
3. Non-Conforming Property. If the property is an old mobile home, land or some other property that is not “loan friendly” for banks, the seller has 2 options – find an all cash buyer or offer owner carry.
Buyers
- Self Employed. Many otherwise “qualified” buyers who may not have a strong Schedule C could face difficulty getting bank financing. These folks are ripe for owner carry.
- Divorce. Many people have been ravaged by divorce, financially and emotionally. But a strong job/income and a lessening of family tension can make this buyer a great prospect.
- Tight Credit. Some people have a little glitch but their overall picture looks good. Examine carefully and you may find a viable prospect.
- Seasonal Job. Some people may have swings in income or work in fields like construction. If these folks have managed their finances accordingly, you may have a good buyer.
- Foreclosure/Bankruptcy. This is a tough one. But, a buyer who is willing to ” spill the beans” and a seller who is willing to do his homework, may lead to a transaction that is good for both of them.
Bottom line – the housing market needs both of you.