Essential information you need to know about seller carrybacks.
Today, I’d like to discuss seller carryback as a nontraditional home-buying option.
Essentially, a seller carryback is when the seller acts as the lender, simplifying the home purchase process. Unlike traditional lenders, sellers often don’t scrutinize your credit or tax situation. However, they do expect a minimum down payment of 20%, and they typically structure the loan for a term of around five years. This arrangement allows them to collect both the principal and interest over that period.
In the event that the buyer defaults on their payments, the seller has the same recourse as a traditional lender—they can foreclose on the property. This enables them to retain the initial 20% down payment and all the interest accumulated during the time the buyer made payments. For example, if a buyer defaults after four years of payments, the seller can initiate foreclosure, keep the funds, and potentially resell the property.
For sellers, this arrangement carries minimal risk, while for buyers, it provides a more accessible path to homeownership. If you’re interested in learning more about seller carrybacks or you need help with your real estate goals, call or email me. I’m happy to help.
