pagesA Seller’s Strategy
Sellers are hesitant to offer financing for mortgage notes when entering unfamiliar territory even when “carry back” benefits are made very clear. This is a natural response because nobody is comfortable with new things, unless that is clothing. However, where owner financing is concerned, sellers and buyers start “thinking outside the box” even if they are familiar with traditional funding. Understanding the process can give a seller the ability to avoid the option of cutting their price and waiting indefinitely for buyer.
Basically, all a seller is doing is acting as the bank or lending institution. A seller can set the sales price determine a down payment and accept the down payment and finance the remaining balance. Financing the remaining balance may be a little scary at first, but it can be done.
If an agent is involved in the transaction, their fees deducted from the down payment and the seller finances the remaining balance. An attorney should be used to create the mortgage document and close the deal once both the seller and buyer have agreed on the interest rate and term of any real estate notes.
The process is just that simple. Now is the time to get into a seller’s strategy frame of mind. That down payment that was just received also has the agent’s fee, if one is used, and may not be big enough to be used as a down payment on another home. The monthly payments that are received will definitely help on payments for a new home but will not help the purchase.
Because many home sellers are looking to purchase a new home, they will need enough money for the down payment. To get that down payment they can sell the cash flow notes they have. This would mean that they would get a lump sum and would not be receiving a monthly payment in the future.
Therefore, a seller’s strategy is simply:
Use the owner financing option and sell your home at a higher price that would otherwise not be possible.
Complete the transaction quickly using a lawyer to close the deal.
Contact one of the many companies that will buy or sell real estate notes. They will purchase your note based on the future payments you would receive and give you a lump sum amount.
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