Gus:
Not knowing where this home is located, This appears to be an higher end home (except for perhaps Calif.)
Using Notes as an aid to market properites more effectively and for top dollar really works, however it is NOT a replacement for other lending, its simply an adjunct.
A buyer for this $400K home will have to have decent financial wherewithal for any Note funder to get comfortable. This will be especially true on a New Note that will have no track record or a limited payment history established. I would suggest that the prospective buyer for such a home have a little stronger credit background and profile, along with stronger credit scores than what you are working with.
I have a motivated seller who has a house that appraised for 400K, he owes 220K and wants 300K. He is open to all suggestions he just needs 25K to move and pay off a debt. He has been thru a bankruptcy and my buyer for this house has some credit issues (570). Is there a way to create a note at the point of purchase so the seller gets his 25K and the buyer doesn’t have to come up with a down payment at closing? Also is it possible to create notes when doing L/O’s? Thanks.