Real Estate Notes: Who, What, Why of Seller Financed Deed Notes Cash Flow

Seller Financing

Roughly one in five homes sold in the US involve some form of seller-assisted financing, and that 20% margin is rising due to the current recession.

What with banks and lenders flat-lining, unemployment rising while foreclosures skyrocket, thus flooding the market with bargains that Joe Seller can’t compete with, and the resulting home-value fallout…Seller financing is fast becoming a hot option for sellers and buyers alike.

Rather than the buyer getting a mortgage through a third party such as a bank, the buyer simply promises to pay back the seller over a set period of time with a set interest rate.  Less paperwork, easier qualification requirements, and shorter closing times are some very nice benefits, but …

Most importantly in the current housing market:   It is easier for the buyer who has been turned down before to buy a great house (yours!) and can also make the house much easier to sell for the seller…and being able to  stay a lot closer to asking price than originally thought is a strong incentive as well.

Instead of the buyer taking out a loan from the bank, the buyer works directly with the seller. They agree on a down payment, interest on the loaned amount of the sale price as well as a payment schedule, for example $1,000 a month every month for 20 years.

But what happens if, after 10 years have passed, the seller decides they want the rest of the money up front? For example, if the total loaned amount + interest was worth $150,000, $75,000 has been paid and the seller decides they just want the rest of the $75,000 as one lump sum. The buyer cannot just give them $75,000 to pay it off, where can they turn? That is where note buyers come in.

Note Buyers < = Click

The document which details the terms of the loan is known as a promissory note, although it is also referred to as a mortgage note. It is the note that promises the buyer will pay back the seller at the appointed rate over the appointed period of time. It is this promissory note that note buyers buy.

Essentially, a note buyer is a third party organization that steps in, pays the original seller the price of the note then takes over receiving payments from the buyer. Nothing changes for the buyer, except who they mail the checks to every month to cover the cost of the loan. The seller, however, receives their remaining payment in a single lump sum.

This lump sum given by the note buyer is usually discounted, however. For example, if there is $75,000 remaining on the mortgage note, the note buyer might give $60,000 to the seller in return for the note. Doing this allows the buyer to make some profit on the transaction and reduce risk in case of default on the part of the original home purchaser.

Why Sell My Note to a Note Buyer? < = Click

There are many reasons that people might have for seeking to sell their note to a note buyer. Perhaps they need a large amount of money to pay off their own loans, or are looking to have money to start a business or purchase a new property for themselves. It can also save sellers from the hassle of collecting payments every month. Whatever the reason, note buyers exist to fulfill this need.

If the home seller is in need of the money in a short amount of time, selling to a note buyer can be a good way to get that money when they need it.

Most often the note seller accrues no out of pocket costs in selling a promissory note. All costs are paid for by the note buyer rather than the note seller.

Depending on circumstances, selling your note to a note buyer can be a good thing. However it is important to remember that there will be a loss on the amount of money paid for the note, you will never be able to receive the full value of the note from a note buyer.

Things Note Buyers Look At When Buying a Note

Current value of the note - This tells the buyer how much money is left on the note

Payment schedule of the note - How many payments are left on the note, how much an individual payment is and for how long payments will be made.

Payment history of the buyer - The note buyer looks to see how well payments have been made in the past on the loan, how timely those payments were and how many missed payments their may have been.

Current value of the property - Tells how much the property is worth in case the buyer defaults on the note and the note buyer must foreclose on the home.

More often than not, however, there are few problems in a note buyer accepting a note. If you are the owner of a note who wants to cash out, there are many note buyers out there who can help you achieve your goals and take that note off your hands.

=>  STRAN Field Services is owned by JB “Pop” Stran, a retired C21 agent and real estate investor with exclusive contact with many private investors who are always interested in adding new cash flow annuities to their espective portfolios.

SFS provides real estate-related services to younger investors, including “bird-dogging” and brokering seller-financed real estate deed notes.

Looking to get the Top Dollar cash offer for your cash flow, deed note, mobile home note or lottery winnings?  SFS will create a “feeding frenzy” among our clients by offering your note for bids…and the result of this friendly competition among our investors is the Maximum Cash Settlement for your note!

Forget the national firms who Never pay over 50% of face value, and slap you twice with a fat fee for their “services”… Their TV ads are expensive, and You pay for them!     The “Free Quote” scams are a marketing tool for the Bait & Switch fly-by-night operators…Don’t fall for it!

 STRAN Field services will get you Top offers from professional note investors at NO Cost to You.

 Our “birddog fee” is a separate amount arranged between the buyer and SFS, so You Get 100% of Your Cash…the way it should be, Right?

Stran Field Services <= use our Simple Q & A format form for Fast Offers

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