A CPA called me about a client selling 40 acres. "The buyer wants the seller to carry back part of the price," she said. "Is that something you buy?" Yes. A seller carryback is just seller financing with an older name, and it is what we buy every week.
What is seller carryback financing?
The seller lends the buyer part of the price and gets paid over time.
In a seller carryback, the buyer pays a down payment and signs a promissory note to the seller for the rest. The seller "carries back" that note instead of getting all cash at closing. A mortgage or deed of trust on the land secures it. Seller carryback, seller financing, owner financing, and owner carry are all names for the same deal.
Carrying back a note?
We buy carryback notes on land at closing for 80% to 90% of the balance. The seller keeps the down payment.
Get a Free QuoteSubmit Your NoteHow does a carry back note work on a land sale?
Down payment at closing, note for the rest, lien on the land until paid.
| Example | Amount |
|---|---|
| Sale price | $100,000 |
| Buyer's down payment (20%) | $20,000, paid to the seller at closing |
| Carryback note | $80,000 at 10.9% for 8 years |
| Buyer's payment | About $1,252 a month |
| Security | Recorded deed of trust or mortgage on the land |
The buyer gets the deed. The seller holds the lien. If the buyer stops paying, the seller can foreclose. Run your own numbers on the owner financing calculator.
Is a seller carryback the same as a land contract?
No. With a carryback, the buyer gets the deed at closing. With a land contract, the seller keeps it.
That difference matters. A carryback note with a recorded mortgage or deed of trust can be sold to a note buyer. A land contract usually cannot, or only at a deep discount. I would avoid land contracts. More in why to avoid land contracts.
Can a seller carry back a second position note?
Yes, but it is riskier, and we do not buy second position notes.
Sometimes a buyer gets a bank loan for most of the price and the seller carries back a smaller second note. If the buyer defaults, the bank gets paid first. We only buy first position notes on land, so if you want to sell your carryback later, set it up as the only lien.
How should I structure a carryback note so I can sell it?
Real down payment, fair rate, first position, title company closing.
- 20% down or more
- A rate around 10.9% and a term around 8 years
- A promissory note plus a recorded deed of trust or mortgage
- First lien position, closed through a title company
- A licensed servicer to collect payments
See our full recommendations in seller financed land deal terms. Rule of thumb: build the note for the next owner, even if you plan to keep it.
Can I sell a seller carryback note for cash?
Yes, at closing or any time after.
We buy carryback notes on vacant land for 80% to 90% of the balance when they meet our criteria, with no seasoning. On the example above, you keep the $20,000 down and we buy the $80,000 note for about $68,000. See sell a promissory note, or plan it before closing with sell at closing. Ask your CPA how selling the note changes your taxes; we cover the basics in installment sale tax on land.
Frequently Asked Questions
What is seller carryback financing?
The seller lends the buyer part of the price and gets paid over time. The buyer signs a promissory note to the seller, secured by a mortgage or deed of trust on the property.
Is seller carryback the same as seller financing?
Yes. Seller carryback, seller financing, owner financing, and owner carry all describe the same kind of deal.
Can I sell a seller carryback note?
Yes. Damen Capital buys first position carryback notes on vacant land for 80% to 90% of the balance, at closing or later.
Do you buy second position carryback notes?
No. We buy first position notes on vacant land only.