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Should you carry the note or take cash?
If you own your house free and clear, or close to it, you have a choice most sellers don’t: take one lump sum, or become the lender and get paid monthly with interest. Seller financing, one of our creative financing structures, usually brings in more total dollars. A cash sale brings certainty and speed. Here’s how to compare them.
A worked example
A paid-off 1962 rambler in Roseville. Retail value in current condition about $300,000.
Option A: Cash sale to us
| Line | Amount |
|---|---|
| Cash price | $232,000 |
| Commission and closing costs | $0 |
| Received at closing | $232,000 |
Option B: Seller financing to us
| Line | Amount |
|---|---|
| Price | $275,000 |
| Down payment at closing | $30,000 |
| Note balance | $245,000 |
| Interest rate / term | 6% / 30-year amortization, 7-year balloon |
| Monthly payment to you | About $1,469 |
| Payments over 7 years | About $123,400 |
| Balloon at year 7 | About $220,000 |
| Total received over 7 years | About $373,400 |
On paper, seller financing brings in far more. But compare fairly: $232,000 invested today would also grow over seven years. And the note carries risk.
What you trade for the higher total
| Cash sale | Seller financing | |
|---|---|---|
| Money at closing | All of it | Down payment only |
| Total dollars | Lower | Higher |
| Timeline to full payment | 7 to 14 days | Years |
| Risk after closing | None | Buyer default |
| Monthly income | None | Yes |
| Tax timing | Gain in one year | Possibly spread as an installment sale |
| Work for you | None | Monitoring payments, taxes, insurance |
Managing default risk
- Bigger down payment. More skin in the game, less risk.
- Shorter balloon. Less time exposed.
- Third-party servicing. Payments tracked and reported.
- Insurance and tax escrow. So a lapse doesn’t surprise you.
- Recorded mortgage or contract. So your security interest is clear.
- Clear remedies. Foreclosure on a mortgage you hold, or cancellation under Minn. Stat. 559.21 for a contract for deed.
Who seller financing fits
- You own the house outright or have a small balance
- You want monthly income, often in retirement
- You don’t need the full amount now
- You’re comfortable with some risk in exchange for more money
Who should take the cash
- You need the money now for a new home, debt or care
- You can’t afford a default
- You’d rather not think about the house again after closing
How we handle it
When we buy with seller financing, we put the terms in writing, use a promissory note and a recorded mortgage or contract, set up servicing, and recommend your attorney reviews everything. Next to it, you’ll see our straight cash offer and what a listing would net. Ask your tax professional about installment-sale treatment. Then pick.