Seller Financed Sell

Anyone used this as an option for their seller? AS the market gets tighter the question about owner has come up often.

I'm not sure how this works can you please explain it more. You say they are used at simultaneous closing or Table closings. Like Iris said the market is changing and I would like to learn more about this.

Table closing or Simultaneous closing works as follows. When a seller finds a buyer that meet the seller's satisfaction. The seller creates a note (seller financing) that will be the mortgage for the home with the seller receiving the payments. Then before the close on the property, the seller gets the note pre-quoted by a third party note buyer. If they agree on the terms of the note and the discount amount, the seller then goes back to the buyer and closes on the property. At that time the buyer must make their first payment, which creates a note that is now sell able. The third party buyer now purchase the note per the pre-quot and the seller gets a lump sum payment. Please note that this is not a loan by the Third Party, it is a purchase of an existing commercial paper.

All the normal aspects of selling the property, such as title policy, and other documents are the same as a bank financed sale.

Reasons for doing this are; one the property is such that a bank or mortgage company do not get involved in or a change in the market, the buyer does not meet all the requirements for a bank loan, for what ever reason the banks are dragging their feet on approving the loan and the seller has other investments they wish to fund with this cash and does not want to wait or any number of reasons.

As for the note it self, I can only suggest desirable points. Notes that have an 80% LTV are desire able. Those written as 30 year fix notes have more value and those without any clauses written like deferred payments of interest or if the roof of the is fixed by a certain day will kill a note. It would help also if the sell hold about 35% equity in the property.

But if you are doing seller financing, in the end you have to write a note suitable to you. Some times this means you have to hold the note you self.

You know your property and what you can afford to do or not do. I suggest that if you do seller financing, check you buyer out, not only look at their credit score, but, their income to debt. There are a lot of individuals with descent credit scores, but they just do not make enough to pay on their existing debt and a mortgage. The best way to avoid foreclosure is to only sell to a qualified buyer.

I hope this helps, seller financing is nothing new, it has been around long before banks existed and the selling of these notes the same.

Paul S Weiss

www.anchorfundingusa.com