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Recovery Hinges on Lending… The Economy Needs Owner’s to Provide Seller Financing

Economist Kenneth Rosen says “Money is easy, but credit is tight– many would-be home buyers have discovered during the downturn that while loans may be dirt cheap, but they’re hard to come by.

Rosen, the chairman of the University of California, Berkeley, Fisher Center for Real Estate and Urban Economics, said he doubts the Federal Reserve’s efforts to keep long-term rates low can stimulate the kind of growth Fed Chairman Ben Bernanke and his colleagues are hoping for.

Speaking of Bernanke (and this is totally a random side note, but it was so funny and poignant at the same time)… watch this video about “Quantitative Easing” and “the Bernanke” if you’ve got 7 minutes to spare:


Anyhow, with bank loans tough to come by, owner financing strategies are increasingly needed to keep the real estate market liquid…  we need buyers and sellers to keep coming together in mutually beneficial ways, even when “the system” isn’t working very well.

But we can’t afford to be sloppy.  Creative deal structuring still needs to be legal, ethical and intelligent, and give all parties a reasonable exit strategy that preserves both real and paper assets.   And if you’re a real estate professional involved in an owner financed transaction, then you really need to know how to advise your clients accurately to avoid liability your broker probably wouldn’t be happy with!

I’ll never forget one seller who brought a seller carry back note to me hoping I would buy it.


  • the way the transaction was engineered,
  • the lack of documentation, and
  • outright errors in the calculation of the numbers in the note

made the note impossible for me to buy. 

When I told him that I probably would have been able to buy at least part of the note if I’d been involved in the underwriting, he nearly exploded with exasperation:

“I asked my agent if he knew anyone that could help us put the note together, and he said ‘no’!”

If you’re a real estate professional that has used seller financing to sell a client’s property, did you also tell them that they could sell their note?  If not, they could come back to you screaming :-/

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