Payments should be made by the buyer at least monthly. The promissory note that will be signed by the buyer should be secured by a deed of trust, which is recorded. It is important to determine if the buyer's new financing will allow for seller carry back or other secondary financing. If it does not, then the transaction cannot be structured in the fashion of the buyer paying part down, obtaining a new first loan on the property and the seller carrying back a second. Otherwise, there is nothing illegal with the seller carrying back a second as long as the seller appreciates the anti-deficiency risks explained above.
Cash is obviously the best vehicle.
You should consult a tax attorney or other tax advisor, such as a CPA, as to the tax consequences of structuring any particular type of transaction. There are, of course, income tax consequences in every sale of real property, and these should be discussed with an appropriate professional before signing on the dotted line with respect to the sale of the property. Beside the standard sale of the property as discussed above in the form of a sales agreement, property can be sold in the form of an option agreement, a lease-option, or a contract of sale. Basically an option agreement gives someone the right over certain period of time to exercise the option and purchase the property and close escrow. A lease option is the same except the person is leasing the property with the option to purchase it.