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Can a Seller Without Any Equity Offer Seller Financing, and Can They Sell Their Note?

“Hello Dawn, You really are the note queen! I am a buyer and I am interested in finding owner financed properties. The only way a seller can sell their note is if they have an assumable loan or own their property free and clear. Is this correct? Or are there other ways to do this, and if so, how does it benefit the seller? I find your website and advice very helpful!

Best Regards,


Hello Howard,

Thank you for your feedback on my website. I’m glad that you find it helpful.

To answer your question, the seller carry back scenario is simplest when the seller owns the property free and clear and has a lot of equity, but a seller can “carry paper” even if all they are doing is leaving their existing financing in place for you. That means that seller financing can work even when the seller doesn’t have any equity.

Free and Clear example:

  • Purchase Price: $300,000
  • 10% Down Payment: $30,000
  • Loan Amount (face value of note): $270,000
  • Amortized Over: 360 (30 years)
  • Interest Rate: 7%
  • Monthly Payment (principal and interest): $1,796.32

You would give the down payment and each monthly payment to the seller (who is now the bank). This seller (now note holder), who is now holding a good first position note, can sell all or part of it if they want to. People who own their properties free and clear have a lot of options. They can sell for top dollar and close quickly by offering seller financing, and then turn around and sell all or part of their note to raise the cash that they need.

No Equity example:

  • Property Value: $300,000
  • Underlying Loan: $300,000 (with 6% fixed interest rate)
  • Monthly Loan Payment (principal & interest): $1,798.65
  • 5% Down Payment (Contribution): $15,000
  • Trust Transfer System used with maturity date: 7 years

With a low down payment of $15,000 (and no bank financing = no hassle or fees), you simply take over the existing financing and get all the benefits of home ownership, including mortgage interest write-offs. You pay the Trustee, and the Trustee pays the lender. You will refinance the property in your own name or sell the property to a third party in 7 years, when, hopefully, the property value is $400,000, and both seller and buyer can split the equity in some fashion.

The seller should be happy to get out from under the payments, avoid short sale or foreclosure, and have a chance at regaining “lost” equity at a future point in time. Obviously, there is no note created in this scenario that the seller could sell. There is already a large note against the property.

Because there are very few, if any, assumable loans out there, we need to structure the transaction in a way that does not violate the “due-on-sale” clause. We do not want the bank to be able to “call” the loan. Most lenders have the contractual right to accelerate the loan (make you pay everything you owe them right now) if you transfer title to another party. The way around this, which still protects the rights of all parties and is 100% legal, is the Equity Holding Trust Transfer System.

You can read more about land trusts if you like.

If you have a particular house you are interested in making an offer on, and/or someone who would like to sell their note, please let me know and I will help you structure your offer and the transaction itself. And, if you want to find an agent in your area familiar with seller financing that will work well with me on helping you close a successful seller financed transaction, just let me know and I’ll help you arrange something.

Best wishes,


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