seller finance in nc

Seller Finance in NC - In Depth Guide on Seller Finance in NC

This in depth article will go over a few key elements to seller financing in North Carolina. What is seller financing in general, how can we use seller financing, what are some of the key advantages and why would you want to use seller finance in NC are some of the questions answered. 

seller finance in nc

Seller Finance in NC - Real Estate from 2022. The Future of Real Estate.

No one could have predicted the influx of buyers that emerged since the start of the COVID pandemic. For over two years the real estate market exploded in most places across the country due to buyer demand coupled with an extreme lack of inventory, low interest rates and a massive uptick in investor purchasing.

Market Disruption and Home Prices Go Up...


Because of this, house prices skyrocketed and many sellers were able to sell homes at previously unbelievable prices, including some cases where the homes had been purchased six months prior or less.  Times are changing...

As interest rates and market inventory begin to rise, the sellers who really need to sell quickly will begin selling their homes at lower prices, affecting their local markets and beginning corrections. With housing prices expected to drop and markets beginning to cool, the tables will turn and many sellers will find themselves ready to sell at a discount.

Hedge Against the Market - Seller Financing Appears!

The threat of this is amplified for sellers who own homes that need work or repairs. However, there are ways to get more money for your home in almost any market and any condition. This is where Seller Financing comes in to play for nearly every home owner.

What is Seller Financing in NC?

Seller financing is a great option for homeowners who want to get top dollar for their homes, with a couple of other interesting benefits. For those unaware, seller financing is a process of selling your home without traditional financing; in essence: You, as the seller, are the bank. 

Understanding Seller Financing and How it Applies to You.

How Seller Financing Works...

  • A Deed of Trust is created (Mortgage) between you (the seller) and your buyer.
  • Depending on the buyer, they may have a Down Payment to use as skin in the deal (just like you would need a down payment to a banking institution if you were to obtain a home loan).
  • Make sure to stay in touch with your attorny or title company throughout the process. 
  • Your attorney or title company will handle all the necessary and legal requirements for doing a seller finance transaction.
  • The attorney or title company receives the buyers down payment funds in escrow and finalized the transfer of the Deed to the new owner.
  • In this sale you are actually transferring the Title or Deed to the new owner.
  • This makes all repairs, taxes, insurance and any other expenses the new owner's responsibility.
  • Your attorney or title company will handle all the necessary and legal requirements for doing a seller finance transaction.
  • You receive a monthly payment in the agreed upon terms of the note. This is how you can be the bank by selling your house with owner financing.

Seller Finance is a GREAT Selling Option...

This option is a great solution for many sellers for several reasons. Financing the home yourself opens up the pool of buyers who can purchase your home.


With rising interest rates and atypically deflated home prices, many buyers have been priced out of homes they can afford, due to the interest rate increase buyers have to look for either lower rates, or a home with a lower sales price.


This is where you can give them both, even if your interested buyer cannot normally obtain a loan for the retail price of your house.  


This gives you an advantage as you can sell your house fast AND since your the bank you can sell your home for a great price while a buyer who couldn't yet get financing from a bank can buy your home.


Deeds of Trust are typically amortized for 30 years. This effectively lets you have an income for the next 30 years or until the buyer refinances with a bank to pay you off completely.

seller finance in nc

PRO TIP: 

Seller Finacing is the main purchase method used to buy many kinds of real estate. Primarily Multi-Family Apartments, Trailer Parks, Houses, Condo's, Duplexes, Triplexes or any kind of property for that matter where a buyer obtians financing from the seller to leverage buying power!

Considering Capital Gains Tax When Using Seller Finance

If the home you’re considering is not your primary residence  (meaning a home that you own where you do not reside) you may be facing substantial capital gains tax from the sale.

Capital gains is money the government charges you for profiting from the sale of a property. In many cases, the profits from the sale of a home can bump most people up one or sometimes two or three tax brackets.

This can affect not only how much you pay from the sale of the property, but also affect how much you pay from other taxable income. Seller financing allows sellers to recognize these gains slowly over time so that the income received is not so dramatic and the tax bracket does not typically fluctuate.

Of course, always speak with your tax professional before making any major purchase or sale to help you with understanding the full implications of any decision.

Why Seller Finance is Great

Seller financing allows a buyer to purchase, using the equity in your home as the bank. The seller financing contract should stipulate that the prospective buyer is responsible for all property taxes, maintenance, etc. Essentially, you should receive all of the benefits of renting without any of the costs of repairs, taxes, or property management!

Make More Money With Seller Financing

Seller financing also has the potential to net you more money over the course of the contract. Depending on the interest rate and the amount included in the payments from the buyer, substantially more than the purchase price should be received over the course of the contract. 

For example, if a seller finance contract between a seller and buyer has a stated purchase price of $200,000, a seller could receive $250,000 to upwards of $500,000 or more over the course of the loan. This is the reason mortgage companies exist and it’s a great strategy to utilize to make extra from the sale of a property.


Here's an example of Seller Finance in NC:

seller finance in nc

List of Steps

1

In this example you can see what happens if you sold your house this way. The loan is $200,000 for 30 Year Amortization (360 Months of Payments) and at a 4% Interest Rate to your buyer; not including any down payment. 

2

Total amount paid to the seller or note holder would be $343,739.01 over the course of 30 years. Simple math would tell you that your going to get over $143,000 extra because of the 4% interest rate!

3

What's nice about creative financing and in this case is we can have the buyer refinance or pay us completely off in let's say 5 years, 10 years or whatever timeframe is agreed upon. 

4

This give both you and the buyer to come to an agreement on selling your house on terms. This is a fast sale of the property and allows the buyer to pay you back over time.

Deciding to Seller Finance Your Home?

Keep in mind they receive the deed and will be responsible for all expenses just like a normal homeowner. 
If they do not make the payments you can foreclose on them just like a bank would. This is the only major con of seller financing. But, it usual goes fine if both parties are in communication on pressing matters.

Mobile Home Parks, Apartment Complexes and all property types in between can use seller financing. This is especially the case when looking to buy or sell a property with a large valuation.

Deciding to Seller Finance Your Property?
In Summary, Seller Financing is a great creative way to sell your property and make monthly income with almost NO downsides! If you are wondering how we can help you decide the route of selling that works for you, fill out the form below to get started today!

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