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There has never been an easier or faster way to cash out of your investment. Whether you need money to pay bills... to buy a home... to fund an education... or even if you just need some spending cash... We'll show you the money!
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Monday, November 16, 2009
Monday, November 2, 2009
Selling A Home In A Tough Market
In previous issues, the best method for selling a home in a tough
market with seller financing was explained. The benefits to the seller
from involving a qualified cash flow finder with a seller financed
deal and having a note buyer "on board" before the note is created
were also covered. While using seller finance techniques to sell a
property are no more difficult than a traditional real estate closing,
following a logical and proven plan is the best method for ensuring a
successful real estate sale with seller financing.
The sellers' misconception
Many property sellers stay away from seller financing because they
mistakenly believe that creating a note is not a viable solution for
selling their home. After all, if they can't walk away with enough
cash to provide the down payment on another property, they'll be
powerless to replace the property they're selling.
As a consequence of this common misunderstanding, many sellers feel
compelled to stick with conventional real estate methods, limiting
their options and missing out on the benefits that seller financing
could offer them.
In actuality, many notes created through seller financing are quickly
sold and the seller ends up with the cash they need. Even better, if
the note is created with buyers' purchasing criteria in mind, the
seller could walk away from the closing table with cash in hand. This
means that the net result is almost exactly the same as with a
conventional real estate sale!
In the cases where the note holder does have a problem selling their
monthly payments, the difficulty in liquidating the note is typically
a result of one general problem: the note was not created with the
buyer in mind. Instead, it was created with only the payer in mind. To
ensure that a newly-created note will be attractive to potential
buyers, it is important to recognize that their purchasing criteria
are important as well.
Too good of a deal
For property sellers looking to sell their note immediately, it would
be a grave mistake to create the note by prioritizing only the payer's
demands. A buyer must have a compelling reason to agree to collect
payments in order to buy a note, such as a substantial down payment, a
respectable payer's credit score (to minimize risk), a competitive
interest rate, or a fairly short term.
An example of a "bad note" from a buyer's point of view would be a
seller financing situation where no down payment was collected, the
payer's credit score was not checked, and the interest rate is fixed
at 3%. Basically, this is TOO good of a deal! Even payers that qualify
for loans from traditional lending institutions would jump at this
offer with no out-of-pocket money required and a rate below prime.
Clearly, the note payer and note buyer are looking for very different
things. Payers would love a "no money down" purchase with financing at
a low interest rate, but most buyers wouldn't want anything to do with
this sort of note simply because it is a bad deal for them.
In a situation without a reasonable down payment there is nothing
holding the payer to their obligation. After all, a payer involved in
a "no money down" purchase could walk away and lose almost nothing
financially. Abandoning their obligation to pay may hurt their credit
score, but it was their substandard credit that forced them into a
seller-financing situation in the first place.
When there is no equity in the property (buyers will use the lower of
the property value or the sales price to calculate equity), all offers
to purchase the secured note will be discounted substantially in order
to compensate for the buyer's risk of default. A heavily discounted
buyout offer often means the seller will not be able to get the money
they need.
If the seller of a private note needs a large amount of cash
immediately, they must be able to sell the note as soon as it has been
created. And to quickly find a buyer, the note must meet the general
buying parameters of these people, which include a solid down payment,
a decent interest rate, and typical terms.
Creating notes that can be sold
Every buyer has their own criteria that determine what they will or
won't buy, but a down payment of at least 10% is a good minimum figure
when creating a note. This upfront payment immediately creates equity
in the property which acts as the buyer's safety net in a foreclosure.
A competitive interest rate is important because it will make it easy
for the buyer to purchase the note and yield the desired profit
without much of a discount to the note holder. Finally, keep in mind
that people typically avoid notes that do not follow a traditional
term (amortized over 120 months, 180 months, etc). A two-year,
interest-only balloon term is a perfect example of a note that most
buyers would avoid.
The points described above are only a rudimentary starting point for
note creation; there are certainly other things that buyers look for
when considering a note. It is always a good idea for the seller to
contact a qualified note finder in order to get the specific
information they need.
The finder will be able to utilize their experience in working with
buyers to give the seller general guidelines about what should meet
most buyers' parameters. Of course, there are no absolute guarantees
of a quick sale, but when the seller creates a note with the buyer.s
needs in mind, it should not be a problem to locate an interested
buyer who will give the seller the cash settlement they need.
email us
Visit A Dog Blog
market with seller financing was explained. The benefits to the seller
from involving a qualified cash flow finder with a seller financed
deal and having a note buyer "on board" before the note is created
were also covered. While using seller finance techniques to sell a
property are no more difficult than a traditional real estate closing,
following a logical and proven plan is the best method for ensuring a
successful real estate sale with seller financing.
The sellers' misconception
Many property sellers stay away from seller financing because they
mistakenly believe that creating a note is not a viable solution for
selling their home. After all, if they can't walk away with enough
cash to provide the down payment on another property, they'll be
powerless to replace the property they're selling.
As a consequence of this common misunderstanding, many sellers feel
compelled to stick with conventional real estate methods, limiting
their options and missing out on the benefits that seller financing
could offer them.
In actuality, many notes created through seller financing are quickly
sold and the seller ends up with the cash they need. Even better, if
the note is created with buyers' purchasing criteria in mind, the
seller could walk away from the closing table with cash in hand. This
means that the net result is almost exactly the same as with a
conventional real estate sale!
In the cases where the note holder does have a problem selling their
monthly payments, the difficulty in liquidating the note is typically
a result of one general problem: the note was not created with the
buyer in mind. Instead, it was created with only the payer in mind. To
ensure that a newly-created note will be attractive to potential
buyers, it is important to recognize that their purchasing criteria
are important as well.
Too good of a deal
For property sellers looking to sell their note immediately, it would
be a grave mistake to create the note by prioritizing only the payer's
demands. A buyer must have a compelling reason to agree to collect
payments in order to buy a note, such as a substantial down payment, a
respectable payer's credit score (to minimize risk), a competitive
interest rate, or a fairly short term.
An example of a "bad note" from a buyer's point of view would be a
seller financing situation where no down payment was collected, the
payer's credit score was not checked, and the interest rate is fixed
at 3%. Basically, this is TOO good of a deal! Even payers that qualify
for loans from traditional lending institutions would jump at this
offer with no out-of-pocket money required and a rate below prime.
Clearly, the note payer and note buyer are looking for very different
things. Payers would love a "no money down" purchase with financing at
a low interest rate, but most buyers wouldn't want anything to do with
this sort of note simply because it is a bad deal for them.
In a situation without a reasonable down payment there is nothing
holding the payer to their obligation. After all, a payer involved in
a "no money down" purchase could walk away and lose almost nothing
financially. Abandoning their obligation to pay may hurt their credit
score, but it was their substandard credit that forced them into a
seller-financing situation in the first place.
When there is no equity in the property (buyers will use the lower of
the property value or the sales price to calculate equity), all offers
to purchase the secured note will be discounted substantially in order
to compensate for the buyer's risk of default. A heavily discounted
buyout offer often means the seller will not be able to get the money
they need.
If the seller of a private note needs a large amount of cash
immediately, they must be able to sell the note as soon as it has been
created. And to quickly find a buyer, the note must meet the general
buying parameters of these people, which include a solid down payment,
a decent interest rate, and typical terms.
Creating notes that can be sold
Every buyer has their own criteria that determine what they will or
won't buy, but a down payment of at least 10% is a good minimum figure
when creating a note. This upfront payment immediately creates equity
in the property which acts as the buyer's safety net in a foreclosure.
A competitive interest rate is important because it will make it easy
for the buyer to purchase the note and yield the desired profit
without much of a discount to the note holder. Finally, keep in mind
that people typically avoid notes that do not follow a traditional
term (amortized over 120 months, 180 months, etc). A two-year,
interest-only balloon term is a perfect example of a note that most
buyers would avoid.
The points described above are only a rudimentary starting point for
note creation; there are certainly other things that buyers look for
when considering a note. It is always a good idea for the seller to
contact a qualified note finder in order to get the specific
information they need.
The finder will be able to utilize their experience in working with
buyers to give the seller general guidelines about what should meet
most buyers' parameters. Of course, there are no absolute guarantees
of a quick sale, but when the seller creates a note with the buyer.s
needs in mind, it should not be a problem to locate an interested
buyer who will give the seller the cash settlement they need.
email us
Visit A Dog Blog
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