Probably the most frequently asked question many sellers ask is
“Why should we even consider seller financing?”
Well….Ask yourself a question…
And naturally be honest with yourself… Are you a bit nervous as a property owner as to where the market is going? Have you wondered about what it will take to get market value in a reasonable amount of time?
The short answer is, “If you could sell for up to 115% of market value and sell 70% faster than normal marketing days, would you be interested? “
Read on to see if any of the following may meet your criteria.
Advantages to seller:
- More potential buyers and marketability of property
- Faster closing
- Less “red tape” of qualifying buyer resulting in
- A more predictable closing as, you the seller are the loan underwriter
- Greater flexibility
- Higher sales price
- Cash at closing
Well-constructed notes can be sold for minimum discount at the point of note creation or at any time in the future.
A note secured by a deed of trust or a business is an asset that can be bought and sold rather easily. The sale of a note is not as different from the sale of real property as you might imagine. Many of the same principles apply, and even some of the same paperwork. The amount of discount required to sell any given asset is related to the amount of risk it represents. The relative risk of any cash flow is usually determined by evaluating the five following factors:
- Is the note Dodd-Frank compliant
- Protective equity
- Credit history of Payor
- Payment History
Notes can be created in a multitude of ways to meet the needs and financial objectives of the note holder.
There are many factors that can be manipulated to come up with a creative, unique solution that meets the needs of all parties concerned. Carrying paper is one of the most flexible, adaptable tools available in the disposition of real estate.
- What’s the minimum amount of cash that the seller absolutely needs?
- What’s the maximum amount of money the buyer can put down?
- What is the credit worthiness of the buyer?
- How long does the seller need or want to carry?
- If there’s a balloon payment, what is the exit strategy?
- Will the seller have regular needs for larger sums of money?
- Do they need to buy a new car, or pay for medical expenses?
- Will the seller need stepped-up payments to keep up with inflation?
This may all seem very complicated. When detailed and if done properly by your team, it is a very simple process.
The Seller Finance Step by Step Process
- Agent Determines seller needs
- Seller Consults with Capstone Capital
- Lender prequalifies buyer
- Negotiate terms of sale
- Title Work
- Buyer costs
- Seller Costs
- Complete Sale
- Note to Servicer
- Seller can:
- Keep Note for cash flow
- Sell Note and cash out
- Sell part of the note and retain some of the note
Because of the flexibility that owner financing provides, Capstone Capital USA can help structure the seller financed note to meet the needs of both seller and buyer. We can “tailor” a program to solve any problem. The buyer will get the property and you, the seller will get the cash.
If you have a specific situation or would like some personalized consulting please fill out the form below.