In a revealing interview on NoteSchool TV, industry veterans Fred and Tracy Ruy shared groundbreaking data showing the seller financing market reached an impressive $28 billion in 2023 – a 24.2% increase from the previous year. This surge comes when traditional real estate sales saw their weakest performance since 1995.

A Market Transformation

“Seller financing has become more utilized in all property classes, not just what we call the cheapos,” explains Eddie Speed, founder of NoteSchool and renowned note investing expert. The data supports this observation, with transaction volumes and dollar amounts showing significant growth despite broader market challenges.

Key Findings from the 2023 Market Analysis

Growing Transaction Volume

• Total seller financing notes created: $28 billion (up 24.2% from 2022)
• The number of transactions increased by 7.3% to nearly 990,000
• Five-year trailing volume reached $125.5 billion

Property Type Breakdown

• Residential: $14 billion (50% of total volume)
• Commercial: $9.3 billion (33% of total volume)
• Land: $3.8 billion (13.5% of total volume)

Strong Down Payments Challenge Industry Misconceptions

One of the most striking findings challenges the common misconception that seller financing primarily involves no-money-down deals. The data reveals:

• Average down payment: 26%
• Average loan-to-value ratio: 74%
• Commercial properties showing even stronger metrics with 72% LTV

Why the Surge in Seller Financing?

The increase in seller financing comes as traditional lending has become increasingly restrictive. The Mortgage Credit Availability Index shows that qualifying for conventional loans has become significantly more difficult, pushing both buyers and sellers toward alternative financing solutions.

“When it’s harder to get a loan to buy a home, there’s more seller financing,” Tracy Ruy explains. This trend is particularly evident in the commercial sector, where note volumes increased from $5.8 billion to $9.2 billion year-over-year.

Geographic Distribution

Texas continues to lead the nation in seller financing, accounting for 25% of all transactions. The top 10 states, including Florida, California, North Carolina, and Georgia, generate approximately 70% of all seller-financed notes.

Professional Note Creation on the Rise

While individual sellers still dominate the market (86%), there’s a growing segment of professional note creators:

• 14% of sellers created multiple notes in 2023
• 8% created 2-3 notes
• 6% created 4 or more notes

Looking Ahead: 2024 and Beyond

Industry experts anticipate continued growth in seller financing, particularly in the commercial sector. With bank lending remaining tight and interest rates stabilizing at higher levels, seller financing presents an increasingly attractive option for both buyers and sellers.

“The banking industry is going to be very careful going forward,” notes Eddie Speed. “Which is just great for us, and I think that’s another indication why last year was so good for us.”

Get Started with NoteSchool

Whether you’re interested in creating quality notes or investing in them, understanding today’s market dynamics is crucial. NoteSchool provides comprehensive training and resources to help you capitalize on these opportunities.

Ready to achieve success in note investing? The best time to start is now! Take advantage of the resources below to learn from industry experts, connect with a thriving community, and unlock your full potential in creative real estate financing.

Your journey toward financial freedom begins today—don’t wait to take the next step!

Whenever you’re ready… here are 4 ways we can help you start your journey into note investing: