Traditional sale vs. seller financing
Traditional sale
- Cash at closing
- $308,000
- Monthly cash to sellerThis transaction only; no reinvestment assumed.
- $0
- Total cash received over 10 years
- $308,000
Seller financing · AITD / wraparound mortgage
- Cash at closing
- $72,000
- Monthly cash to sellerInitial scheduled net P&I; excludes servicing, taxes and insurance.
- $1,490
- Total cash received over 10 years
- $494,972
Projected nominal cash over 10 years, before taxes — not profit or an apples-to-apples return. Balloon due in month 120. Payments and ending proceeds assume performance; money received later is not worth the same as cash today.
- The balloon assumes the buyer refinances or sells on time. If they cannot, the seller may face a default and possible foreclosure.
Existing mortgage stays in place; due-on-sale and seller liability remain. Buyer default and balloon refinancing can interrupt these projections. Obtain legal, lending and tax review before committing.
Calculation breakdown & annual detail
- Sale price
- $400,000
- Cash down
- $80,000
- Buyer note = sale price − down
- $320,000
- Existing debt included in buyer note
- $60,000
- Remaining seller equity in note, before costsBuyer note = existing debt + remaining seller equity. Debt is not added again.
- $260,000
- Traditional selling costs (8%)
- $32,000
- Traditional mortgage payoff
- $60,000
- Seller-financing closing costs (2%)
- $8,000
- Financing cash at closingDown − closing costs; no mortgage payoff at closing.
- $72,000
- Buyer P&I (6%, 30-year amortization)
- $1,919
- Underlying P&I (3.5%, 15 years remaining)Estimated from entered terms.
- $429
- Buyer scheduled payments received
- $230,227
- Buyer interest received (gross, not profit)
- $178,022
- Underlying interest paid through payments
- $15,050
- Underlying interest accruedIncludes unpaid interest added to the balance, if any.
- $15,050
- Net interest spread (not profit)Buyer interest − underlying accrued interest; before costs and taxes.
- $162,972
- Underlying actual payments made
- $51,472
- Buyer note balance at horizon
- $267,794
- Ending buyer balloon / payoff
- $267,794
- Underlying remaining payoff (deducted once)
- $23,578
- Net ending proceeds / required cash
- $244,216
- Total nominal cash over 10 yearsNet closing cash + buyer payments − underlying payments + ending proceeds − remaining underlying payoff.
- $494,972
| Year | Buyer interest | Underlying interest paid / accrued | Buyer balance | Underlying balance | Net payments |
|---|---|---|---|---|---|
| 1 | $19,093 | $2,051 / $2,051 | $316,070 | $56,903 | $17,876 |
| 2 | $18,851 | $1,941 / $1,941 | $311,898 | $53,697 | $17,876 |
| 3 | $18,593 | $1,826 / $1,826 | $307,469 | $50,376 | $17,876 |
| 4 | $18,320 | $1,708 / $1,708 | $302,767 | $46,937 | $17,876 |
| 5 | $18,030 | $1,586 / $1,586 | $297,774 | $43,376 | $17,876 |
| 6 | $17,722 | $1,459 / $1,459 | $292,473 | $39,688 | $17,876 |
| 7 | $17,395 | $1,328 / $1,328 | $286,846 | $35,870 | $17,876 |
| 8 | $17,048 | $1,192 / $1,192 | $280,872 | $31,915 | $17,876 |
| 9 | $16,680 | $1,052 / $1,052 | $274,529 | $27,819 | $17,876 |
| 10 | $16,289 | $906 / $906 | $267,794 | $23,578 | $17,876 |
Annual net payments exclude closing cash and ending settlement. Fixed-rate P&I only; servicing, escrow, taxes, insurance and default are not modeled.
Optional comparisons & note-sale sensitivity
- Seller financing with mortgage paid off at closingOptional variant: down − closing costs − mortgage payoff. Negative cash requires seller funds.
- $12,000
- Monthly cash, payoff variant
- $1,919
- Total nominal cash over 10 years, payoff variant
- $510,022
Hypothetical note sale requested in year 5
The earlier of sale, balloon or amortization determines the actual horizon. Note prices are uncertain; remaining underlying debt is deducted once.
| Price / balance | Gross ending proceeds | Total nominal cash |
|---|---|---|
| 70% | $208,442 | $326,443 |
| 80% | $238,219 | $356,221 |
| 90% | $267,997 | $385,998 |
| 100% | $297,774 | $415,776 |
Mortgage, balloon & other material risks
Put these numbers beside the property
You have a view of the seller’s cash. Now put it beside the property’s rent, expenses and unanswered questions. Free, no signup needed, with an example to follow.