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The Untold Truth About Seller Carryback Financing

When credit tightens and bank loans slow down, creative financing becomes the lifeline of real estate. In markets like Las Vegas, Nevada, where sellers want top dollar but buyers need flexible funding, seller carryback financing is a strategy that keeps deals moving.

Instead of relying on a bank, the seller acts as the lender, carrying a note and receiving payments directly from the buyer. Investors use it to acquire properties with less cash up front, and sellers use it to turn a quick sale into steady monthly income.

What Is Seller Carryback Financing?

Seller carryback financing, also called owner financing, is when the seller finances some or all of the purchase price. Instead of a traditional mortgage, the buyer gives the seller a promissory note secured by the property.

Key features:

• Buyer provides a down payment (sometimes covered by gap or JV funding)
• Seller holds the loan for the remaining balance
• Terms are flexible — interest rate, amortization, and balloon payments are negotiable
• The note is legally recorded, just like a bank loan

Why Las Vegas Investors Use Seller Carrybacks

• Faster Closings – No waiting weeks for bank underwriting.
• Motivated Sellers Benefit – Many want steady income instead of one lump sum.
• Investor Flexibility – Ideal for flippers and buy-and-hold investors who plan to refinance later.
• Easier Qualification – Approval depends on negotiation, not credit scores.

Real-Life Example (Las Vegas Investor)

• Property: $400,000 single-family outside Summerlin
• Seller agrees to finance: $380,000 balance at 5% interest, 3-year balloon note
• Buyer provides: $20,000 down payment (covered by a gap loan)
• Monthly rent: $2,800; monthly payment to seller: $2,200
• Net monthly cash flow: $600
• Long-term exit: Refinance or resell before balloon date

Without seller carryback financing — and without gap funding to cover the down payment — this deal would have been impossible. Instead, the investor generated monthly cash flow and built equity with very little out of pocket.

The Morby Method Connection

Educator Pace Morby popularized the “Morby Method,” which combines seller financing with private or institutional funds to fill gaps. In competitive markets like Las Vegas, our company helps investors apply this exact model by pairing creative seller financing with gap loans, EMD funding, and short-term JV partnerships.

Challenges and Risks of Seller Carrybacks

• Seller Reluctance – Some sellers don’t want to act as the bank.
• Due-on-Sale Clauses – Existing mortgages may restrict new financing structures.
• Balloon Payments – Notes often require payoff or refinance within a few years.
• Contract Complexity – Poorly written agreements can lead to disputes.

Solution: Our company specializes in helping investors structure seller carryback deals properly, cover down payments and carrying costs, and secure funding until refinance or resale.

Best Practices for Seller Carryback Financing

• Always use an attorney to draft or review contracts
• Be transparent with sellers about risks and benefits
• Pair seller carry with gap or JV funding to minimize your out-of-pocket cost
• Have a defined exit strategy — refinance, rental cash flow, or resale

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