Seller Financing, or “Tote the Note”

Sometimes a seller of a commercial property will “take back” a mortgage and promissory note at closing in lieu of receiving all of the purchase price.   This is especially true for more “difficult to sell” properties by not requiring the buyer to obtain conventional lender financing.  If a seller is inclined to do this, I recommend a down payment of at least thirty percent (30%) of the purchase price.  This will dissuade the buyer from later defaulting and potentially walking away from the property.  If he does walk away, or does not sell, there is a lot of equity which will benefit the seller if it has to foreclose and take the property back as collateral for the loan.

Mitch