SMART SELLERS FINANCE STRATEGIES: Make the Sale, Keep the Cash

When sellers offer financing, it doesn't mean they will be stuck carrying monthly payments for years to come. In fact, a professional Note Specialist can show them how to increase the value of a note before it's created, by offering guidelines an attorney can use to create a note with qualities Note Buyers look for. This results in a note that can be liquidated for cash, quickly and safely.

THE SELLERS' MISCONCEPTION
Many property sellers avoid seller financing because they believe it's not a viable solution for selling a home. After all, if they can't walk away with enough cash to provide the down payment on another property, they will be powerless in trying to replace the property they are selling.
But in actuality, many notes created through seller financing are quickly sold for cash. Even better, if the note is created with the buyers' purchasing criteria in mind, the seller could walk away from the closing table with cash in hand! This means that the net result is almost exactly the same as with a conventional real estate sale.
In the cases where Note Holders do encounter difficulty in selling their monhly payments, it's typically because the note was not created with the Note Buyer in mind. This is why it is a good idea to involve a professional Note Specialist even before the note is created.

PLANNING AHEAD TO MAKE A NOTE " A GOOD DEAL"
If the seller of a private note needs a large amount of cash immediately, he/she will want to sell the note as soon as it's created. To quickly find a buyer, the note must meet the general buying parameters:

• A substantial down payment
• An excellent credit score( to minimize risk of default)
• An interest rate of 8% or more
• A term that comes due in 10 to 15 years.

If there is no down payment collected and the interest rate is low, the note would be great for the new property owner, but not for the note buyer. In a no money down real estate sale, lenders worry that the buyer could walk away and lose almost nothing financially. So to offset this risk, lendreds generally set higher interest rates so they get more money per payment.

Unfortunately, Note Buyers do not have the ability to change the terms of the note. So when there is little or no equity in the property, all offers to purchase the secured note must be discounted substantially in order to compensate for the buyers' chances of default. The downside is that a heavily discounted buyout offer often means the seller can't get the money he/she neede from her note.

CREATING NOTES THAT CAN BE SOLD

Every Note Buyer's criterias vary, but in the current market, the home buyer's down payment should be a minimum of 10% of the sale price. The upfront payment immediately creates equity in the property to serve as the buyer's safety net in the event of a foreclosure.

A competive interest rate is important because it will make it easy for the buyer to purchace the note and yield the desired profit without much of a discount to the Note Holder.

Finally, keep in mind that people typically perfer notes that follow a traditional term (amortized over 120 months, 180 months, ect). A two-year, intrest-only balloon term is a perfect example of a note that many buyers would avoid. But remember, ALL NOTES ARE GOOD NOTES AT THE RIGHT PRICE.

Of course, there are no absolute garantees of a quick sale. but it is always easier to obtain an attractive offer for the Note Holder when the note is written with the buyers' needs in mind.