There is a lot of money to be made in real estate, even for people who do not own any property. This is possible if they decide to buy and sell mortgage notes. Real estate notes, commonly known as mortgage notes, are basically contracts that promise to pay the amount that is secured by any real estate property.
What are the steps involved in selling the mortgage note? First, after note sellers receive an initial quote, they advise the broker or the buyer on the cash option that they have chosen.
In note transactions, the phrase ‘simultaneous closing’ is often used to describe transactions that take place when the seller is carrying back a note as payment for his property. The intention behind selling the note is to exchange it for cash. Thus, ‘simultaneous closing’ means that there are two separate closing transactions taking place at the same time, during an escrow closing.
Why do people try to sell a mortgage note? Mainly because people have sudden exigencies or requirements that call for ready cash. Alternately, there are other incidents like the depreciating values of real estate, insurance liabilities, or vandalism that force people to sell mortgage notes. There are also instances where a low interest rate might mean that the mortgage is worth more today than it would be in the future. Then there is the belief that with a nationwide recession, people with ready cash who are quick to act have more prospects than the ones who like to wait and watch.
In the recent years, owner financing has emerged as an established and accepted practice in real estate. The emergence of the private mortgage industry in the US has boosted owner financing as a better and more attractive option that it ever had been in the past.
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Wednesday, September 17, 2008
Wednesday, September 10, 2008
How to Get More Than The Asking Price For Your Property
Part 4 of 4
How Creative Home Sellers Have The Advantage
Creative home sellers offering seller financing can often sell their houses faster in a slow market - often at a higher price! In the process, these sellers act as the “bank,” and begin to receive monthly payments instead of a lump sum of cash.
So what happens when those offering seller financing need an immediate lump sum of cash instead of scheduled future payments? Locating a buyer for the newly-created cash flow could be the answer.
To get the money they need, sellers that offer financing could sell the future mortgage payments they are set to receive.
How sellers get quick cash for their notes
This process can be streamlined when the savvy home seller lines up a buyer for the payment stream before the note is even created. 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. Once the closing and the note sale are complete the seller will have the money she needs for her next home.
Finding the buyer for the seller-financed mortgage is the tricky part. Buyers won't line up at the door. In fact, they don't often browse the newspaper or the web looking for people with notes to sell. This is where the professional Note finder comes in!
Note Finders are real estate professionals that specialize in connecting the people who create notes with those who buy them.
While I do not assist with the creation of a note, I can provide general recommendations about the types of terms that are attractive to Note Buyers. With my knowledge, experience, and connections within the secondary finance industry, I can save home sellers a lot of time and effort when liquidating a note. Most importantly, I can help locate a buyer for your note and make the process smooth and easy.
When working with a property seller who needs a lump sum of cash immediately after selling real estate, contacting a finder like me early in the process of creating the real estate note makes sense.
By involving a Note finder before a note is created, the property seller can receive valuable input about the payment characteristics that Note Buyers prefer.
And for any completed seller-financed deals, a qualified Note finder can help Note Holders obtain a large amount of cash in exchange for future payments.
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. I can be reached via email
Sincerely,
Sydney Griecci
Follow us at Twitter to be informed of the next update to this article.
We buy Mortgage Notes
How Creative Home Sellers Have The Advantage
Creative home sellers offering seller financing can often sell their houses faster in a slow market - often at a higher price! In the process, these sellers act as the “bank,” and begin to receive monthly payments instead of a lump sum of cash.
So what happens when those offering seller financing need an immediate lump sum of cash instead of scheduled future payments? Locating a buyer for the newly-created cash flow could be the answer.
To get the money they need, sellers that offer financing could sell the future mortgage payments they are set to receive.
How sellers get quick cash for their notes
This process can be streamlined when the savvy home seller lines up a buyer for the payment stream before the note is even created. 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. Once the closing and the note sale are complete the seller will have the money she needs for her next home.
Finding the buyer for the seller-financed mortgage is the tricky part. Buyers won't line up at the door. In fact, they don't often browse the newspaper or the web looking for people with notes to sell. This is where the professional Note finder comes in!
Note Finders are real estate professionals that specialize in connecting the people who create notes with those who buy them.
While I do not assist with the creation of a note, I can provide general recommendations about the types of terms that are attractive to Note Buyers. With my knowledge, experience, and connections within the secondary finance industry, I can save home sellers a lot of time and effort when liquidating a note. Most importantly, I can help locate a buyer for your note and make the process smooth and easy.
When working with a property seller who needs a lump sum of cash immediately after selling real estate, contacting a finder like me early in the process of creating the real estate note makes sense.
By involving a Note finder before a note is created, the property seller can receive valuable input about the payment characteristics that Note Buyers prefer.
And for any completed seller-financed deals, a qualified Note finder can help Note Holders obtain a large amount of cash in exchange for future payments.
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. I can be reached via email
Sincerely,
Sydney Griecci
Follow us at Twitter to be informed of the next update to this article.
We buy Mortgage Notes
Saturday, September 6, 2008
Friday, September 5, 2008
How to Get More Than The Asking Price For Your Property
Part 3 of 4
How Does Down Payment Affect Note Value?
For many Note Buyers the amount of the initial down payment at the time of sale can make or break a note deal. The down payment is applied directly toward principal, creating instant equity in the property. Accordingly, most Note Buyers want to confirm the amount of the down payment up front.
With no down payment, it would take many years to build a meaningful amount of equity in the property. Take a look at the following example that illustrates this point.
House #1: valued at $100,000, with a down payment of $20,000 made at the time of sale.
House #2: also valued at $100,000, but with zero down payment made at the time of sale.
The note on House #1 has $20,000 in equity. No down payment made on House #2 means that there is no equity in the property before the first monthly payment is made.
Consider how much “upfront” money there is
Assuming that House #2 was sold for $100,000 with a 30-year note amortized at 8 percent interest, it could take years to build $20,000 in equity.
Because the Note Holder’s purchase is protected by the equity in the property, the amount of the down payment is an important consideration. With the zero down note on House #2, the Note Buyer would need to apply a larger discount in order to make it a fair deal for him. On the other hand, while the note on House #1 is secured by a $20,000 down payment and has substantial protective equity even before the first monthly payment, it would cost the Note Buyer a lot more.
Almost any note deal can be a good deal… for everyone involved
A strong down payment lends a side benefit related to having protective equity. When a large down payment is made at the time of sale, that person is more likely to be committed to owning the house and keeping up with the note payments. Seller-financed deals with zero down payments are very attractive to first-time home buyers or others without a large nest egg saved – but it can be riskier for the Note Buyer. So the educated Note Buyers can offset this risk by increasing the discount on low or zero down payment notes.
Remember, even a note created without a down payment can be a sound purchase. The key is to look at each situation individually and to establish a fair price based on the specific note.
Even when liquidating private mortgages at a discount, Note Sellers still get to receive a lump sum of cash immediately instead of waiting years – decades, even – before the debt owed to them is paid.
The bottom line is that a qualified professional Note Finder can bring a benefit to both parties – the Note Holder and the buyer. In the end, when a deal is struck, everyone wins and ends up in a stronger financial position.
Join my mailing list or subscribe to this publication by leaving me your contact information. I can be reached at 303.317.4488 or via email at sydney@smilingdogenterprises.com.
Sincerely,
Sydney Griecci
Follow us on Twitter to be informed of the next update to this article.
How Does Down Payment Affect Note Value?
For many Note Buyers the amount of the initial down payment at the time of sale can make or break a note deal. The down payment is applied directly toward principal, creating instant equity in the property. Accordingly, most Note Buyers want to confirm the amount of the down payment up front.
With no down payment, it would take many years to build a meaningful amount of equity in the property. Take a look at the following example that illustrates this point.
House #1: valued at $100,000, with a down payment of $20,000 made at the time of sale.
House #2: also valued at $100,000, but with zero down payment made at the time of sale.
The note on House #1 has $20,000 in equity. No down payment made on House #2 means that there is no equity in the property before the first monthly payment is made.
Consider how much “upfront” money there is
Assuming that House #2 was sold for $100,000 with a 30-year note amortized at 8 percent interest, it could take years to build $20,000 in equity.
Because the Note Holder’s purchase is protected by the equity in the property, the amount of the down payment is an important consideration. With the zero down note on House #2, the Note Buyer would need to apply a larger discount in order to make it a fair deal for him. On the other hand, while the note on House #1 is secured by a $20,000 down payment and has substantial protective equity even before the first monthly payment, it would cost the Note Buyer a lot more.
Almost any note deal can be a good deal… for everyone involved
A strong down payment lends a side benefit related to having protective equity. When a large down payment is made at the time of sale, that person is more likely to be committed to owning the house and keeping up with the note payments. Seller-financed deals with zero down payments are very attractive to first-time home buyers or others without a large nest egg saved – but it can be riskier for the Note Buyer. So the educated Note Buyers can offset this risk by increasing the discount on low or zero down payment notes.
Remember, even a note created without a down payment can be a sound purchase. The key is to look at each situation individually and to establish a fair price based on the specific note.
Even when liquidating private mortgages at a discount, Note Sellers still get to receive a lump sum of cash immediately instead of waiting years – decades, even – before the debt owed to them is paid.
The bottom line is that a qualified professional Note Finder can bring a benefit to both parties – the Note Holder and the buyer. In the end, when a deal is struck, everyone wins and ends up in a stronger financial position.
Join my mailing list or subscribe to this publication by leaving me your contact information. I can be reached at 303.317.4488 or via email at sydney@smilingdogenterprises.com.
Sincerely,
Sydney Griecci
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Wednesday, September 3, 2008
How to Get More Than The Asking Price For Your Property
Part 2 of 4
Equity attracts Note Buyers
One key to liquidating a seller-financed mortgage is found in the property’s equity. The equity in the private note essentially acts as a “safety net” for the Note Buyer, in case there is a problem collecting the payments. So note buyers find deals with strong equity more attractive.
Remember, a Note Buyer is purchasing monthly payments secured by property. If the property is worth more than the remaining balance of the note, the buyer could seize the extra value in a foreclosure situation by reselling the property. This allows the new Note Holder to recoup his initial outlay and receive the additional equity.
Most Note Buyers will do a quick equity check before looking at any other information. By first determining the note’s Loan-To-Value (LTV), buyers can decide whether to dig deeper or move on. The LTV is calculated by comparing the balance of all of the loans to the value of the property.
Two equity examples
To illustrate, let’s consider two houses, each valued at $100,000. One home has loans of $95,000 and the second home has loans of $70,000.
The first home has an LTV of 95 percent (95k/100k = 95), indicating only 5 percent equity (100 – 95 = 5).
The second home has an LTV of 70 percent (70k/100k = 70), showing 30 percent equity in the property (100 – 70 = 30).
Clearly, most buyers will not be as interested in the note on the first home because there is virtually no protective equity. In this situation, the buyer of the note would want to discount the note purchase a fair amount to make up for the fact that there is little equity.
The second note with 70 percent LTV will require less discounting, and the Note Holder will receive a larger portion of their note as compared to the note balance. This is because the Note Buyer stands to benefit from holding a substantial amount of equity in the property (30 percent) if the Payor were to default on their obligation.
Join my mailing list or subscribe to this publication by leaving me your contact information. I can be reached at 303.317.4488 or via email at sydney@smilingdogenterprises.com.
Sincerely,
Sydney Griecci
Follow us at twitter to be informed of the next update to this article.
Equity attracts Note Buyers
One key to liquidating a seller-financed mortgage is found in the property’s equity. The equity in the private note essentially acts as a “safety net” for the Note Buyer, in case there is a problem collecting the payments. So note buyers find deals with strong equity more attractive.
Remember, a Note Buyer is purchasing monthly payments secured by property. If the property is worth more than the remaining balance of the note, the buyer could seize the extra value in a foreclosure situation by reselling the property. This allows the new Note Holder to recoup his initial outlay and receive the additional equity.
Most Note Buyers will do a quick equity check before looking at any other information. By first determining the note’s Loan-To-Value (LTV), buyers can decide whether to dig deeper or move on. The LTV is calculated by comparing the balance of all of the loans to the value of the property.
Two equity examples
To illustrate, let’s consider two houses, each valued at $100,000. One home has loans of $95,000 and the second home has loans of $70,000.
The first home has an LTV of 95 percent (95k/100k = 95), indicating only 5 percent equity (100 – 95 = 5).
The second home has an LTV of 70 percent (70k/100k = 70), showing 30 percent equity in the property (100 – 70 = 30).
Clearly, most buyers will not be as interested in the note on the first home because there is virtually no protective equity. In this situation, the buyer of the note would want to discount the note purchase a fair amount to make up for the fact that there is little equity.
The second note with 70 percent LTV will require less discounting, and the Note Holder will receive a larger portion of their note as compared to the note balance. This is because the Note Buyer stands to benefit from holding a substantial amount of equity in the property (30 percent) if the Payor were to default on their obligation.
Join my mailing list or subscribe to this publication by leaving me your contact information. I can be reached at 303.317.4488 or via email at sydney@smilingdogenterprises.com.
Sincerely,
Sydney Griecci
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Monday, September 1, 2008
How to Get More Than The Asking Price For Your Property
How to Get More Than The Asking Price For Your Property
Part 1 of 4
When the number of real estate buyers is greater than the number of available homes, real estate property values usually go up. It’s an ideal environment for sellers because buyers are forced to compete, and properties usually sell quickly – often for even more than the asking price!
But as more properties go on the market, buyer competition subsides. Prices level out, and eventually drop. Most assume this is a bad time to sell a home. But in fact, it can be the best time for educated sellers to tap into a little-known market, using the creative power of seller financing.
A seller’s best strategy
With the help of a professional Note Finder, a seller can open the doors to buyers normally locked out by traditional financing. A so-called “down market” is the ideal time for resourceful sellers to target the millions of people who can’t get funding. These buyers are often willing to pay more in order to buy a home without traditional financing.
The seller sets the price, determines and accepts a down payment, and then finances the remaining balance. The buyer gets a home without having to fully-qualify for a traditional loan. It’s a favorable situation for both seller and buyer. And while this “outside of the box” form of financing can seem a bit daunting, it can happen very smoothly and easily with the knowledge, experience, and guidance of a professional Note Finder like me.
Here is an example: If the seller wants $100,000 for the property, and the buyer gives the seller $10,000 cash, the seller will finance the balance of $90,000. The buyer and seller would then agree to the terms, such as the interest rate and the total term, and use an attorney to create the mortgage document and close the deal. From that point on the buyer sends the seller monthly payments for the house he has just purchased.
A great opportunity for sellers
The whole process can really be that simple. But there are some substantial differences between a seller-financed deal and one that relies on traditional bank funding.
First of all, the seller will not receive a large one-time payment at the time of the sale. In fact, she will only receive the down payment. Since many home sellers are also looking to buy another property, the seller may need to get enough at closing to pay her down payment. Without this payment, the seller’s hands could be tied when she looks to purchase another house. There is a common solution to this issue that offers the potential for even MORE money to the seller!
Note Finders specialize in helping new mortgage holders sell newly-created notes for a lump sum of cash. In the end, seller financing could be used to sell property at a higher price than expected and the sellers could get the money they need. Essentially, sellers can “have their cake and eat it too.”
In summary
Step #1: Use the seller-finance option to find unique customers willing to purchase at a higher price than would have been possible otherwise.
Step #2: Decide on the terms of the deal and create the note to complete the real estate transaction quickly.
Step #3: If the property seller needs immediate cash, contact me to help locate a buyer for the new mortgage note. The person who buys the future payments from the seller will likely provide the funding to act as a down payment on a new house and every party involved in the deal comes out smiling.
Join my mailing list or subscribe to this publication by leaving me your contact information. I can be reached at 303.317.4488 or via email at sydney@smilingdogenterprises.com.
Sincerely,
Sydney Griecci
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Monday, August 18, 2008
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
List your note at Smiling Dog Enterprises
Thursday, August 14, 2008
FeedBurner Added to Blog
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Monday, August 11, 2008
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
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.
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