Using a short-term purchase money note from the seller instead of transactional funding on a double close

A useful example of paper-based double closing: a 1970s three bed on a slab, tired but dry, where the seller had inherited the property and was carrying a small mortgage on it. Contract price 96k. End buyer at 127k, cash, closing five days after signing. Instead of transactional funding for leg one, the wholesaler asks the seller to carry. At closing on leg one, 6k cash pays off her existing loan, and a purchase money note for the balance, secured by a first position deed of trust, due in full in 30 days with no prepayment penalty, covers the rest, plus 1,500 to her for agreeing to it. Leg two closes the same afternoon and her note is paid off out of the buyer's funds. She is in the money in about five hours, the same outcome as using a funder. Why a seller in this position often says yes: she has already had one buyer fall out on financing and wants a signed deed and a date more than anything else. The 1,500 helps close the gap. Against a 31k spread, costs run: 1,500 carry fee, 6k of cash in and back out, two sets of closing costs and recording at about 2,900 combined, transfer tax on both legs, small title search fee. Net lands around 24,600. The hard part is usually the closer. Many will decline to record a note and a release the same day, and only a closer who has done it before, with an underwriter who signs off, makes it work. Whether same-day recording of a note and its release is possible at all depends on the state's recording practice and the title insurer, which is why having an attorney draft the note and review the sequence before making the offer is worth the cost. The two habits worth keeping: get an attorney involved early, and ask the seller before assuming a funder is needed.