With conventional mortgage rates creating friction in the market, many buyers in New Hanover and Brunswick counties are looking for alternatives. Their solution? Asking you to be the bank.

Seller financing is making a comeback, especially for unique assets like raw land in Pender County or vintage beach cottages on Oak Island that traditional lenders might scrutinize. But in North Carolina, becoming a lender involves more than just a handshake. It requires navigating a specific minefield of state statutes that can leave unprepared sellers with zero recourse.

The Opportunity: Why Be the Bank?

For sellers who own their property free and clear (a necessity, as an existing mortgage with a "Due-on-Sale" clause usually kills this deal), carrying the note is a strategic power move.

Command a Premium: You can often maintain a higher purchase price in exchange for offering below-market interest rates.

The "Installment Sale" Tax Play: By receiving payments over time rather than a lump sum, you may be able to spread your capital gains tax liability over several years.

Insider Note for Investors: Be careful with vacation rentals. Depreciation recapture is often due in the year of the sale, regardless of how much cash you actually received at closing.

Strategic Reality: The "Anti-Deficiency" Trap

This is the single most critical "insider" detail for NC sellers, yet it is rarely discussed until it is too late.

Myth: "If the buyer stops paying, I'll foreclose, sell the house, and sue them for the remaining money I'm owed."
Reality: North Carolina has a strict Anti-Deficiency Statute (N.C.G.S. § 45-21.38) specifically for seller-financed "purchase money" notes.

The Risk: If the buyer defaults and you foreclose, you generally cannot sue them for a deficiency judgment. If the property sells at auction for less than they owe you, you cannot go after their personal assets for the difference. Your only recovery is the property itself.

The Strategy: Because of this statute, you must demand a significant down payment (typically 20% or more). You need an immediate equity buffer to ensure the property is always worth more than the loan balance.

Regulatory Nuance: The "One-Property" Rule

Federal laws like Dodd-Frank impact how you structure the loan. You are not a bank, so don't try to act like one without knowing the rules.

The 1-Property Exemption: Generally, you can seller-finance one property in a 12-month period with flexible terms, including a balloon payment (e.g., a 30-year amortization schedule with the full balance due in 5 years).

The 3-Property Limit: If you finance more than one (up to three), strict rules kick in. You are typically banned from using balloon payments, and you must formally verify and document the buyer's ability to repay.

Your Next Step

Seller financing is a powerful tool to unlock liquidity in a tight market, but it is not a DIY project. You need a specific Deed of Trust and Promissory Note drafted by a competent NC real estate attorney—never a generic "Contract for Deed" downloaded from the internet.

At Aspyre Realty Group, we act as the bridge between creative financing and market reality. We are experts in listening and communicating people's wants into homes (and terms) that work for them.

Contact Aspyre Realty Group today. Let’s evaluate if your property is a candidate for seller financing and structure a deal that secures your investment.

(Disclaimer: We are real estate experts, not attorneys or CPAs. Always consult legal and tax professionals for specific advice.)