SIMULTANEOUS CLOSING & SELLER FINANCING
Simultaneous closing is a two part transaction where the seller of a real estate property, be it a home, commercial building, a condo, land, or a mobile home, agrees to provide owner financing and carry back a note for the buyer with the intent of selling the note immediately after closing on the property. Simultaneous closing is basically "Creative Financing" that is pre-structured by the FSBO, the buyer, and a Cashflow Consultant(Funds-Marts) and can best be described as a two step process. Step 1 would be when a property seller or FSBO offers owner financing to the buyer, creates an owner carried note then closes on that note. Step 2 is when one of our funding sources steps in and purchases that note at a discount immediately upon closing and gives that seller cash for their note.
Private mortgage / real estate note is created when a real estate owner sells a piece of property using owner financing. Owner financing means the property seller finances the sale of the real estate, rather than a bank or a lending institution.
The owner accepts a down payment from the buyer and a mortgage note for the balance. The note is structured at an agreed-upon interest rate, to be paid back over an agreed upon amount of time.
There are various reasons buyers and sellers use owner financing.
What are the benefits to the property seller?
By offering "Creative Financing" the pool of potential buyers is greatly increased, the amount of paper work is greatly reduced, thus reducing the hassle and delays of conventional bank financing and buyer qualifying. Some of the most common problems with traditional bank financing can be: problems with not owning a property long enough before selling it, problems with buying distressed property that may not meet appraisal requirements, strict guidelines for self employed individuals, tons of income verification, and strict verifications of a down payment. Some other problems can be: verifying 401K’s, retirement accounts, other real estate owned, survey or termite reports, written verification of employment that takes a lot of time to get back from employers because they are mailed, with a simultaneous closing a quick phone verification will do.
The Seller is able to sell to a wider range of buyers:
They may have unseasoned funds for a down payment versus most traditional bank requirements that expect at least 3 months of seasoning.
Their debt to income ratio may be too high for a bank loan.
They may have a short job history for bank loans.
They may have unverifiable income.
Self employed with little money to put down.
Ok credit but little money to put down.
Bad credit but has 20% to put down.
Discharged bankruptcy with some positive credit since.
Past credit problems but has reestablished some credit.
They may have a few current credit blemishes.
Simultaneous closings offer more Fast and Easy closings because they skip the red tape and all the jumping through hoops that traditional bank financing entails. Often with simultaneous closings the property seller can get a higher price for their home without the real estate commission involved. This program can work well for real estate investors or rehabbers and homeowners that want to sell their home easier, faster, and to a wider audience of buyers. The costs of a simultaneous closing are less because the property buyer does not have to pay points or fees to a mortgage broker or bank.
First: The Home Seller wants to sell his home in the shortest time and get the highest price for it.
Second: The person with Imperfect Credit or the person whose mortgage application the banks denied, still wants to Buy a home.
Third: To entice the Seller to sell to an Imperfect credit person, is to give the seller little more money for the house.
Fourth: To entice the Imperfect credit to pay a little more for the house, we offer him/her Owner Financing. They do not have to deal with the Banks & Mortgage Companies.
In summary, a simultaneous closing is done when real estate is sold and bought--the seller takes back the note, and the note is simultaneously sold to an investor, effectively giving the seller an all-cash deal.
These notes can be structured to meet the note holders' every need from a full sale, including: Real estate sale/purchase, (which creates a Note) plus the mortgage Note & mortgage sale/purchase, (which sells the Note for cash)
And other variations of the deal:
-A partial sale-- where only enough monthly payments are sold to fund the seller's immediate needs.
-A split funding-- whereby the note holder receives a lump sum of cash now, continues to receive a portion of the monthly payment for a time. Ultimately the entire monthly payment reverts back to the note holder.
By using a professional cashflow consutant (Funds-Marts), the transaction can usually be customized to meet your needs--both now and for the future.
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