Selling Property with a Land Trust or Mortgage Note!

In many cases, home buyers are in a financial position to afford the monthly payments associated with home ownership, but they lack the down payment necessary to purchase a home. Or the buyer's credit score or rating may prevent him or her from obtaining the traditional bank or mortgage company financing required for the purchase of a home. When this is the case, it often makes sense for the buyers to consider purchasing a home or piece of real estate and have the owner/seller provide the financing for the purchase - called a Land Contract or Contract for Deed.

Likewise, selling a home by way a land contract can prove beneficial to the seller in many ways. Selling property with a land contract can provide a quicker and more inexpensive way for the property owner to sell the property - the seller does not need to comply with the often rigid and tedious guidelines of bank financing and the delays that often accompany those guidelines. Likewise, real property sold on a land contract can often be priced higher than sales with bank financing since the seller provides the all-important financing and the buyer is often times not required to come up with a large down-payment, thereby permitting a higher asking price for the property.

So how does a land contract work?

Land contracts are common throughout the United States. In some states, they are called Trust Deeds, Contract for Deed, Deeds of Trust, Notes, or (privately held) Mortgages, but they all represent the same thing: a way of selling property where the buyer "borrows" from or relies upon the seller for the financing rather than paying cash up front or borrowing from a bank.

The process is generally as follows:

The seller and buyer enter into a contract that normally states that the seller shall transfer ownership of the property to the after the buyer has fully paid the seller the agreed upon purchase price. In most cases, the contract requires the buyer to make a modest down payment and then to make monthly payments over time. The land contract can require the buyer to pay the seller interest on the money owed (just like a bank would). Also, because the buyer and seller privately negotiate and reach their own sales terms, the contract can also call for smaller monthly payments - beneficial to the buyer - and then a balloon payment to be made at some certain period of time; this balloon or lump sum payment will pay the balance of the purchase price for the property.

During the term of the land contract (i.e. while the contract is in force and effect, the buyer is not in default and until all of the payments are made), the buyer holds legal possession of and occupies the property. The land contract can call for transfer of the property once the seller has received all of the required payments or can call for the transfer at some time sooner, with the seller then holding a mortgage on the property to ensure that the balance of the purchase price will be paid in full. Whatever the terms agreed upon for transferring ownership, when the agreed upon transfer date is reached, the seller tenders (or gives) a deed to the property to the buyer who then records the deed in the county recorders office or the real property office of the county where the property is located.

While the benefits of land contracts are many, there are some potential pitfalls to a land contract that the parties must be aware.

If the buyer misses any payment under the land contract, he or she may lose the property (the right to have the deed transferred to him) and the seller may keep the money paid up to that point as rent. Thereafter, the seller would not be required to transfer the deed to the buyer.

Some states have laws providing that if a buyer makes a majority of the payments under a land contract (which cover a large percentage of a purchase price of the property), the seller may not be able to keep or refuse to transfer the deed if the buyer can make payments on the contract price at a later date (known as the right of redemption). Your state laws should be reviewed.

A disadvantage for the buyer can be found when the seller has a mortgage on the property that the buyer is purchasing and the seller does not payoff existing mortgages by the time the buyer pays the entire purchase price - thereby causing the property to subject to foreclosure. The buyer should determine whether or not any mortgages exist on the property being purchased and then require the seller to pay off all mortgages prior to the final payment being made - but if the seller does not, the buyer should be aware that he or she may be required to pay off the mortgages.

We Buy and Sell Mortgage Note or Land Trusts. Contact us for more information information@smilingdogenterprises.com

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Future Payments or Get Cash Now

Future Payments or Cash Now...

Creative home sellers who offer seller financing to potential buyers can often sell their houses more quickly (and at a higher price) in a slow market.

While applying seller financing techniques isn't more difficult than traditional real estate sales, it is important to recognize that the buyers looking for seller financing represent a different target market than typical bank-financed customers.

Similarly, the process for obtaining a large cash payment for the seller after a note is created varies from the conventional real estate closing technique as well.

Fulfilling a Seller's Need for Cash

In some seller-financed real estate situations, the property owner may have an immediate need for more cash than is available from the scheduled principal and interest payments. This situation often comes about when the seller needs to have enough money to use as a down payment for their next real estate purchase.

In order to quickly obtain a large proportion of the money due from the loan they just created, the seller could sell the monthly note payments to a buyer for a lump sum of cash. By locating someone willing to buy the note payments, the seller will have ready cash for a down payment or any other pressing financial need.

In order to streamline the seller finance sale situation, it is advisable to have potential buyers for the newly-created cash flow at the ready. A seller can start looking for buyers before the note is created, or even before a seller-financed buyer is "lined up". This way, the property seller could have a buyer for the payment stream ready to make the purchase as soon as the new private mortgage is created.

Locating the Right Note Buyer

But what is the best method to find these note buyers? In stark contrast to locating seller-finance buyers for the real estate itself, a classified ad in the paper is not the best option. Most people looking to purchase a stream of monthly payments do not look in the newspaper for potential cash flows to add to their portfolios. An alternate marketing strategy is required for finding note buyers.

In recent years, the Internet has become the best place to find cash flow purchasers. Using keywords such as "buy monthly payments" or "buy mortgage payments" at a popular search engine website should lead to many interested buyers.

Sometimes there are so many potential buyers, it can be difficult to figure out where to start. Also, cash flow buyers tend to have distinctly different financial parameters; an opportunity that meets the needs of one person perfectly may not be attractive at all to another. Therefore, it is often best to work with someone who could give the seller a general idea about how notes should be structured.

Using Note Finders...

In the secondary finance industry, a unique group of individuals exists who specialize in locating note buyers. These cash flow specialists - often known simply as "finders" - have a unique understanding of what most buyers are looking for. These finders are happy to work with agents and their clients. Many of them utilize online marketing and have Internet websites to facilitate the buyer location process.

The best of the bunch also look in the newspaper for property sellers offering financing, so sometimes a good finder will contact the seller if their property is advertised as FSBO. Finders specialize in helping property sellers locate buyers for secured notes.

Once in contact with a finder, the seller should explain the details of the situation. While note finders won.t be able to offer any legal advice or assist with the creation of a note, they are qualified to give general recommendations about what types of terms are attractive to note purchasers. Most importantly, note finders will be able to help locate a buyer for a newly-created cash flow.

Remember, these finders are not note brokers, meaning they will not "show" the seller's note to buyers or act as a representative. They will only pass the information along to someone who would be interested. Once a commitment to purchase the cash flow has been established, the buyer will step in and complete the deal.

When working with a property seller who needs a lump sum of cash immediately after selling their real estate, contacting a finder early in the process of creating a real estate note makes sense. By involving a qualified note finder BEFORE a note is created, the property seller can receive invaluable input about the payment characteristics that note buyers prefer.

Without this knowledge, the property could sell quickly with the creation of a new note, but the seller might end up collecting the payments long-term instead of being able to quickly "trade" the future payments for an upfront cash settlement. If the property seller will need a large amount of cash quickly, it makes sense to plan ahead for a buyer to purchase the cash flow and involve the services of a note finder.
Post a note now @ smilingdogenterprises.com
email a question notes@smilingdogenterprises.com

Sell Your Property FAST - for the PRICE YOU WANT!

Creative Financing Journal

How to Sell Your House Fast - At The Price You Want!

The Inside Secrets To Seller Financing
When it comes to selling real estate, one of the biggest obstacles sellers face is a so-called “depressed” market. Even when a property is highly desirable, it can be hard to get the price you want in this real estate environment. You could end up losing a lot of time, money, and opportunities, waiting for a “perfect buyer” who may NEVER materialize!
The traditional solution is to drop your asking price. But this common strategy doesn’t always work in your favor. In fact, it can work against you, making your home seem undesirable and your position seem weak.

But there IS a way to turn this challenge into a profitable opportunity!

The seller finance solution
More and more home sellers are turning to private financing to sell properties quickly and at the best possible price. Why? Because it’s a great way to attract an untapped group of potential buyers looking to buy a home outside of conventional financing.
Seller financing can put you back in the driver’s seat and turn ANY market into a SELLER’S DREAM!

You see, there is a large percentage of first-time home buyers who cannot get approved for bank funding because of their credit situation. These buyers will often offer to pay even MORE than the asking price for the opportunity to live the American dream of home ownership.
Once you understand a few secrets to seller financing, you’ll know why these “credit challenged” folks can be your “perfect buyers” and provide a positive solution for ALL parties involved…

Seller financing: a powerful tool to sell homes in a stagnant market
Private financing can lead to many more home buyers
Seller financing could help sellers get more money for their property
Sellers could still receive the cash they need when financing the sale of their property

How to Sell Your House Fast - At The Price You Want!
1. Seller financing can enable YOU to sell your home quickly and easily, at the price you want.
2. It gives the BUYER a chance to purchase a home that would otherwise be out of reach.
3. If a real estate agent is involved, it allows the agent to collect a commission from a sale that wouldn’t happen through traditional means.
So everyone wins!

Turning the sale into cash
But what happens if the buyer does not put down a substantial down payment and the seller needs additional cash to purchase another property? That’s where the beauty of seller financing comes in. It’s possible for the seller – now the mortgage holder – to turn around and sell the mortgage note for a lump sum of cash!
It’s easier and more common than most people ever imagine!
As a professional Note Finder, I specialize in helping holders of mortgage notes get immediate cash for their paper asset. In fact, if you or someone you know holds a mortgage note, I can help turn it into CASH right now!

“Seller financing is a powerful tool to remedy real estate situations that otherwise look grim.”

Liquidating your seller-financed notes
How a Note Finder Helps It All Happen For You!
There is a growing group of note business professionals known as “Note Finders” who are making it easier than ever to sell real estate notes. These folks are individuals who help Note Sellers find a buyer. Also known as cash flow specialists or note liquidators, Note Finders collect and organize information about potential note sales so that people who buy notes can easily determine if the stream of income is right for them.

Note Finders serve to inform Note Holders of their options. They also help to streamline the process of selling a cash flow by helping Note Holders to understand the process.
Note Finders know what types of note terms, interest rates, down payments, and payment schedules Note Buyers prefer, and are familiar with typical yield notes. Therefore, an experienced finder can give home owners pertinent information to structure a new note so that it sells quickly.

As a Note Finder, I have an in-depth understanding of the private note industry and I am able to approximate the value of most secured cash flows.
Keep in mind that Note Finders do not act on the behalf of either the Note Holder or the buyer and do not provide counsel to either party; we represent ourselves.

I can give you an idea of what makes a note attractive to buyers as well as present information about a note to potential buyers, but will not assist either party with the decision to finalize a note deal.


Seller Financing: Creating A Note For Quick Sale

Seller financing is a popular way to sell real estate without dropping the price. In fact, builders will often offer financing to sell the properties they’ve built in a difficult market without having to reduce their prices. When the property owner is willing to “carry back” a note many advantages can result:
1. The Seller can get a higher selling price.
2. The property can sell faster.
3. The overall sales closing ratio can increase.
4. The note can generate a steady payment stream for long-term income.
But in order to sell a house this way, the home owner needs to market the property to a different type of buyer.
Attracting “credit challenged” buyers requires a different strategy to reach a different demographic. The seller must use a more targeted marketing technique, designed specifically for the “unconventional buyer’s market.” And the most effective advertising methods to tap into this distinctly separate pool of buyers might surprise you!
Seller Financing: Creating A Note For Quick Sale

How much is a note worth?
When deciding to liquidate a seller-financed note the first step is uncovering how much the note is worth. To do that, it’s best to get inside the head of the Note Buyer.
Note Buyers always want a good deal, so most of them will usually begin by conducting a quantitative evaluation of the numbers on a cash flow. The two factors that buyers look at first are the note term and interest rate.

How term affects note pricing
To illustrate, consider these two similar notes with different terms. Assume that both notes have a balance of $100,000, with a fixed interest rate of 8 percent.
The first note has payments of $733.76 per month over 30 years (360 months), while the second note will be paid off in 10 years (120 months) at $1,213.28 monthly – a term three times shorter. For this example, assume that the buyer is looking to yield 15 percent on the remaining payments.
If no payments had been made towards the $100,000 balance, the buyer’s offer at 15 percent would be $58,030.25 for the 30-year note and $75,202.55 for the 10-year note. Based on the figures alone, you can see that the second note with the shorter term will receive a much higher offer.

An “interesting” consideration
The interest rate is also a important point for buyers when they start their note evaluation process. Specifically, buyers look for interest rates that are “just right” – neither too high nor too low. Interest rates that are too high will make it difficult for the Payor to meet her monthly payment obligations, making a foreclosure likely.
Conversely, when the interest rate is too low, many buyers find that the amount they can pay for the note typically won’t meet the seller’s needs. As a result, many buyers will avoid making offers on notes with extremely low interest rates because past history has shown that these deals can be difficult to close.

Yield vs. Interest = Discount
Here is the critical point: the amount of the discounted offer that a seller gets from a prospective buyer is usually a direct result of the difference between the interest rate and the buyer’s yield. A note with a lower interest rate forces the buyer to make up his yield from the discount instead of the interest that accrues each month. So, as the difference between the note’s interest rate and the buyer’s desired yield grows the offer to the seller decreases.
This effect can be illustrated using two notes, both written for $100,000 and amortized over 30 years. The first has an interest rate of 3 percent and payments of $421.60. The second note is amortized at an interest rate of 10 percent with monthly payments of $877.57.
If the buyer wants to yield 15 percent on the remaining payments (with no payments made yet), the offer for the first note would only be $33,342.72 on the 3 percent note, but $69,403.63 for the 10 percent note. Remember that the balance on each note was $100,000, so the discount is $66,657.28 and $30,596.64 respectively… simply because of the difference in interest rate.
Any experienced buyer who runs these figures will realize that almost all Note Holders would find a discount of $66,000 or more on their $100,000 note very difficult to swallow. A few buyers might consider lowering their personal yield requirements in an attempt to reduce the discount – if the note has other compelling attributes.
I look forward to talk with you further about any of the strategies explained here. Please contact me if you’d like to discuss this information or for help with any of your note transactions.

Seller Financing: Creating A Note For Quick Sale

Greetings,
My name is Sydney Griecci. As a professional note finder, I specialize in developing creative cash solutions; namely, I help note holders receive a lump sum of money in exchange for their secured real estate notes. I can also show home owners how to sell their property with seller finance.
Once a real estate note is created, it can be sold for cash shortly after the close of escrow. Existing notes can also be sold to achieve cash liquidity.
Additionally, if you are looking to purchase a paper asset for your own portfolio, I have the resources to show you many viable opportunities.
If you are an attorney, CPA, real estate agent, mortgage broker, title agent or escrow officer, I can assist you in helping your clients realize quick sales of hard-to-sell properties through the use of private financing.
If you would like to learn more about the creation and/or sale of secured private notes, please contact me directly.
Join my mailing list or subscribe to this publication by leaving me your contact information.

Using unconventional marketing to attract the “credit challenged” buyer

The seller’s best strategy for finding credit-challenged buyers is to advertise the property in media that is read or seen by individuals who do not have a real estate agent.
The “For Sale By Owner” section in the local newspaper is the best place to start, because that’s where the majority of home buyers go when looking for seller financing. Even in today’s Internet-dominated business world, newspaper advertising continues to be the best way to reach those looking for seller-financed deals.
All it takes is a simple sale ad including the line “seller financing available,” “credit issues OK” or “little or NO down payment needed” and you should catch the attention of the right potential candidates.
Additional buyers for a seller-financed real estate deal could respond to an advertisement on an online classified website. There are many popular and low-cost consumer websites with networks all across North America. By including the search terms “seller finance,” “seller carry back” or the acronym “FSBO” in your online classified text, you’re sure to reach many potential buyers nationwide.
How to do the deal
Once an interested buyer is located and the details of the initial payment, payment term, interest rate, and any necessary clauses are established, the buyer and seller can move forward to create a seller-financed note.
The details of the note creation are easily handled with a standardized boilerplate or the assistance of an attorney. Then the paperwork is recorded at the courthouse and the note deal is finalized.
If you need to know more about selling real estate with private cash flows, I will be happy to help. I am a professional Note Finder and I can help facilitate the transaction for you, as well as help you find an immediate cash settlement for the property seller after the note is created.
sydney@smilingdogenterprises.com