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Seller Finance Presentation for Real Estate Agents and Loan OfficersTRANSCRIPT
Creative Financing EducationStill Puzzled about Seller Finance Transactions?
Your PresentersYour PresentersJax PetteyJax PetteyReal Estate Attorney 801-208-0025Real Estate Attorney 801-208-0025President of 1President of 1stst National Title [email protected] National Title [email protected]
George AndersenGeorge AndersenMortgage Banker 801-550-1382Mortgage Banker 801-550-1382Credit Education [email protected] Education [email protected]
Rob AubreyRob AubreyAssociate BrokerAssociate Broker 801-694-4762801-694-4762Resident GeekResident Geek [email protected]@aubrey.net
Discussion TopicsDiscussion TopicsSeller Financing…Seller Financing…
Just a short term “Bridge Loan”?Just a short term “Bridge Loan”?
How does the How does the BANKBANK look at it? look at it?
The Long Term SolutionThe Long Term Solution
How does the How does the LAWLAW look at it? look at it?
The Legal and Board of Realtor SideThe Legal and Board of Realtor Side
Not Cover Today
Cover Today
Real Estate Principles, Contracts, Real Estate Principles, Contracts, Mortgages, Credit, LawMortgages, Credit, Law
The Reality…The Reality…1.1. 43 Million Americans (25.5%) with FICO 43 Million Americans (25.5%) with FICO
scores of 599 or below scores of 599 or below *www.247wallst.com 07/13/2010*www.247wallst.com 07/13/2010
2.2. Feeder population of “un-banked”Feeder population of “un-banked”3.3. Over supply of housingOver supply of housing4.4. Tighter credit standardsTighter credit standards
Just a blip???Just a blip???
Where is Contract for Deed?
What is the 4155?
Is this something new?
Will it stick around?
Magna Carta
What are overlays?
Where is the resistance?Where is the resistance?
The home owner The listing agent
Visual Acuity - Test #1
DDyynnaammiiccaallllyy structured seller financing structured seller financing
Uniform Real Estate Contract (Contract for Deed)Uniform Real Estate Contract (Contract for Deed)Can write over an FHA or a VA loanCan write over an FHA or a VA loanBuyer may use combinations of cash and hard costs of Buyer may use combinations of cash and hard costs of
improvements to satisfy down paymentimprovements to satisfy down paymentSeller retains titleSeller retains title HUD Circular Letter 7 - 90 HUD Circular Letter 7 - 90Buyer holds enforceable “Equitable Interest”Buyer holds enforceable “Equitable Interest”
www.realestate.utah.gov
Direct substitutes for a CA$H down payment1. Roofing2. Windows3. Insulation/weather stripping4. HVAC systems5. Solar and wind systems
Fun things you can do with FHA loans
• Negotiated with other sales concessions1. Carpet and decorating allowance2. Plumbing and electrical fixtures
• 3 ways to borrow money for down payment
The Role of the Lender1. Identify the Road Block2. Prescribe the Remedy3. Set time frames4. Get commitments5. Structure the final close
On the hook, and get paid LAST!
Fico, the big 3, and big business
bankruptcydischargesettlement.com (2008)
In June of 2004, the Public Interest Research Group revealed that (79% or more) have significant errors in their credit profiles. These errors affected credit scores by 50+ points.
10th Circuit Appeals Court ruled that E-Oscar is not a reasonable validation method (2010)
Government bail out for credit scores?
Credit Education!!!
You cannot play the seller finance game without this relationship…
Approved in all 50 statesPersonalized credit coachingEducation and self-help library12-month credit restoration service24/7 web accessMoney back guaranteeRefer 5 and the service is FREE
www.united-www.united-credit.orgcredit.org
Banks, we don’t need no stinking Banks
Possible Titles for the SELLER FINANCE
SYSTEM
How To write the OfferHow To write the Offer
REPC REPC May need to cross out certain sections.May need to cross out certain sections.
Seller Finance AddendumSeller Finance AddendumSelect Appropriate TermsSelect Appropriate Terms
For Contract for Deed For Contract for Deed Select OtherSelect OtherWrite “Contract for Deed/UREC”Write “Contract for Deed/UREC”
More items to chew on…More items to chew on…#1#1 Sales are entered on the MLSSales are entered on the MLS#2 Transaction is eligible for a 1031 Exchange
Paradigm Shift – it’s the decade of the Realtor
Benefits to the Transaction?Benefits to the Transaction?
HUD1 settlement statementHUD1 settlement statementOwner’s policy of title insuranceOwner’s policy of title insuranceClosed with 3Closed with 3rdrd party legal advice party legal advicePayments made to, and “trigger” documents Payments made to, and “trigger” documents
flow through, a 3flow through, a 3rdrd party escrow company party escrow company
…Looks, feels, and acts like an institutional closing
Make a bigger net
Haul in ALL the fish
Sift and Sort Policy
Revised Sales Strategy
What is the Objective?What is the Objective?
1.1. Share the information and educateShare the information and educate2.2. Set up regularly scheduled classes for:Set up regularly scheduled classes for:
a. Our peers and co-workers who will attend this classb. Our Sphere of Influence who will attend a Consumer Oriented class
Seller Finance Education Website, coming to a computer near you!
From Theory to Practice
=
Just do it!You retain on average only 7% of what you hear.
To learn, you must DO.
Catch a tsunami and you’re sitting on top of the world.
DYNAMIC FINANCE
EDUCATION
First thing: write it down
Legal advice must be given in each of these transactions.
You should not give it:
Or you can Have An Attorney do it
Your BrokerYour Team LeaderYour Owners
Seller Finance Options
1. Lease Option
2. Contract for Deed
3. A.I.T.D.
Strong For Mo. Legal You
Seller
2 $500
Both 2-7
$1,500Buyer 7
$500 to $1500
In order to have a successful transaction, you must:
Customize Contracts to Meet the Specific Needs of each party to the contract
Correctly Educate all parties to ensure Creditability and Comfort
Indemnify, Indemnify, IndemnifyClose the Transaction
THE DYNAMIC FINANCE SYSTEM
Buyers
Document set Strong for? Mo. Legal $ Realtor1. Lease Option Seller 2 $5002. Contract for Deed Both 2-7 $500-$1,5003. A.I.T.D. Buyer 7 $1,500
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Buyer Pool
How do you get people into your
Other Agents
Buyers
Pool
Lending Partner Ghost
Signs
KSL and craigslist
Past ClientsRadioWebinars
Business Owners
Seminars
7 referrals
CROA and the Financial Reform ActCROA and the Financial Reform Act
As a federally-chartered credit union
As a credit union services organization
As an operating subsidiary of a federally-chartered credit union
United-Credit.org
Sift and sort your prospects while the law sifts and sorts your strategic partners
Monetary acuity - test #2
THE DYNAMIC FINANCE SYSTEM
Buyers
Credit
Listings Final Close
Lending Partner New Buyer
Document set Strong for? Mo. Legal $ Realtor1. Lease Option Seller 2 $5002. Contract for Deed Both 2-7 $500-$1,5003. A.I.T.D. Buyer 7 $1,500
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Three Types of People
1. Those that don’t get it and do it, They will be SUCCESFULL2. Those that get it and do it They will be VERY SUCCESFULL3. Those that don’t do itLearn the script, “Would you like fries with that?”
Next Class in….???