What is a seller carry back?

A seller carry back, also known as seller financing or owner financing, is a real estate transaction where the seller acts as the lender, providing the buyer with financing to purchase the property. In this arrangement, the buyer makes payments directly to the seller instead of a traditional lender such as a bank.

Seller carry backs can benefit both buyers and sellers. For buyers, it can be a way to secure financing when they may not qualify for a traditional mortgage. It can also allow buyers to negotiate more flexible terms, such as lower down payments or interest rates. For sellers, offering seller financing can attract more potential buyers, as it expands the pool of eligible buyers who may not have access to traditional financing. It can also provide sellers with a stream of income from the monthly payments.

However, there are potential risks involved in a seller carry back arrangement. Sellers may be at risk of default or non-payment by the buyer, which could result in the seller having to foreclose on the property. Buyers should also be aware of potential pitfalls, such as higher interest rates or shorter loan terms compared to traditional financing.

Overall, seller carry backs can be a valuable alternative to traditional financing in real estate transactions, but both buyers and sellers should carefully consider the risks and benefits before entering into such an agreement.