Seller Carry Question -- Do Banks Like or Dislike?

I’m trying to put my first park under contract. I negotiated a deal with the sellers where more than half of the purchase price would be seller carry, and the rest would be bank financing. Now, their lawyer is involved, and is saying that the deal will have zero seller carry.

A question for the board – do banks generally look favorably or unfavorably upon seller carry for parks? My understanding is that in most real estate transactions, a bank would rather just be the exclusive lender, and not have to worry about a second-position held by the seller. But I have also heard that some banks look favorably upon second position seller financing, because it shows that the seller is willing to put his money where his mouth is, and the bank will have a bigger cushion.

Thanks in advance for any feedback.

I should also add that the park is not in the greatest shape – a lot of old POHs, some of which will need to be junked.

I hope you got the 50% seller carry back in writing. Do you have a signed contract? If the seller signed a purchase agreement with them carrying back 50% then that’s the deal. The lawyer isn’t able to unilaterally change the contract.
If you have all your ducks in a row and the contract is lock tight then tell their attorney you want “Specific Performance” of the contract. Otherwise the seller’s are in Breach.

As far as owner Carryback, I have experienced banks being very tight with lending. A low quality park is going to be harder to finance. Some lenders allow secondary financing and other do not.


Thanks SDGuy. No, the seller carry is not in writing. The deal point was struck in the negotiation. I put it in the proposed purchase agreement, and that’s when the lawyer got involved.

The bank will also look at the total debt service of the bank loan plus seller carry loan. If the debt service is too high relative to the park’s income, then the bank will most likely not go for it. Typically they want a 1.25 DSCR (debt service ratio) or higher.

Commercial lenders won’t allow a ‘silent second’ as you are constructing.
This is loan fraud.

Also, good luck getting a bank loan if the park is not stabilized. You did not mention the occupancy rate.

Acutally, I’m confused.
You say there is to a seller second, but their lawyer says no.

Best advice – Ask the lender or broker who is packaging this loan about seller seconds.

Keep us posted,


I don’t quite see how a seller second is ‘fraud.’ We’ve got one park with a seller second, and the bank is quite fine with it.

That said, many banks are leery of ‘$0-down’ deals. They want the buyer to have skin in the game. Nice that the seller is willing to carry (shows some confidence), but banks really want to see the buyer have equity in the deal (shows much greater confidence). We’ve only ever gotten one bank to let us put $0 down.

But given the POHs and their poor condition, my gut says this is not a good first-park purchase for you. Unless you are experienced in this business, I’d suggest you pass on this deal and find one with no POH.

My 2 cents worth,


Thanks for the responses.

Mike, the seller carry portion would be fully disclosed to the bank, so I am not worried about any fraud issues. Also, to clarify, I negotiated the seller carry directly with the sellers. Then the sellers hired an attorney, and through their attorney, they are now trying to eliminate the seller carry deal point. The occupancy rate is north of 75%.

Jefferson, It wouldn’t be a zero-down deal. I would obtain first mortgage financing from the bank. Based on the intelligence that I have from the lenders in the area, that would require between a 10% to 25% down payment. So I would certainly have skin in the game. The balance of the purchase price, over and above the first mortgage financing, would be carried with a second position seller note.

I appreciate your thoughts on passing. I realize that the POH are a big problem, and they have certainly given me pause. But from what I know so far, there appears to be enough potential upside to this deal to warrant getting it under contract and starting the due diligence process.

This thread is great info to me.

I talked to a few potential loan brokers, and they all told me that If I put 30% down, then I can borrow the rest. While I am trying to sell two properties to raise the funds for down payment, I cannot control the timing. So it looks like if a seller that is willing to carry 20% for two years (I put down another 10%), then I should be able to close deal now.

I’ve had interesting feedback from banks about seller financing. I’m a park owner and broker for parks. I brokered a park for over $1.5 million and about $300k was in seller carry back. The buyer already had a park worth a couple million so he had a great relationship with a local bank already. The bank let him use the seller carry back as the down payment on this new park. He only had $40k down on a $1.5m park. I thought it was crazy. But again, he had tons of equity with that bank from his other park. It shows how important banks that are local to a park can be a good option.

Another park was a campground sale, but banks look at them the same way as MHPs. The bank that was carrying the mortgage currently tried to push the new buyers into an SBA loan like crazy. And they alsowantedthe seller to carry back a couple hundred thousand on a $1.6m property. I thought it was interesting / weird that a bank would want a seller carry back involved to lower their risk. Seller carry backs are very popular in bigger deals in my experience. We even use them as part of a 25% down payment on bank financing. Just my experience.