The Inside Secrets To Seller Financing

When it comes to selling real estate, one of the biggest obstacles sellers face is a so-called “depressed” market. Even when a property is highly desirable, it can be hard to get the price you want in this real estate environment. You could end up losing a lot of time, money, and opportunities, waiting for a “perfect buyer” who may NEVER materialize!

The traditional solution is to drop your asking price. But this common strategy doesn’t always work in your favor.In fact, it can work against you, making your home seem undesirable and your position seem weak.

But there IS a way to turn this challenge into a profitable opportunity!

The seller finance solution

More and more home sellers are turning to private financing to sell properties quickly and at the best

possible price. Why? Because it’s a great way to attract an untapped group of potential buyers looking to buy a home outside of conventional financing.

Seller financing can put you back in the driver’s seat and turn ANY market into a SELLER’S DREAM!

You see, there is a large percentage of first-time home buyers who cannot get approved for bank funding because of their credit situation. These buyers will often offer to pay even MORE than the asking price for the opportunity to live the American dream of home ownership.

Once you understand a few secrets to seller financing, you’ll know why these “credit challenged” folks can be your “perfect buyers” and provide a positive solution for ALL parties involved…

(continued on page 2)

How to Sell Your House Fast - At The Price You Want!HIHIgHlIgHTS

v o l u m e 1 3 I S S u e 0 1 A n n u A l S u b S c r I p T I o n : $ 2 9

Seller financing: a powerful tool to sell homes in a stagnant market

Private financing can lead to many more home buyers

Seller financing could help sellers get more money for their property

Sellers could still receive the cash they need when financing the sale of their property

using unconventional marketing to attract the “credit challenged” buyer

The seller’s best strategy for finding credit-challenged buyers is to advertise the property in media that is read or seen by individuals who do not have a real estate agent.

The “For Sale By Owner” section in the local newspaper is the best place to start, because that’s where the majority of home buyers go when looking for seller financing. Even in today’s Internet-dominated business world, newspaper advertising continues to be the best way to reach those looking for seller-financed deals.

All it takes is a simple sale ad including the line “seller financing available,” “credit issues OK” or “little or NO down payment needed” and you should catch the attention of the right potential candidates.

Additional buyers for a seller-financed real estate deal could respond to an advertisement on an online classified website. There are many popular and low-cost consumer websites with networks all across North America. By including the search terms “seller finance,” “seller carryback” or the acronym “FSBO” in your online classified text, you’re sure to reach many potential buyers nationwide.

How to do the deal

Once an interested buyer is located and the details of the initial payment, payment term, interest rate, and any necessary clauses are established, the buyer and seller can move forward to create a seller-financed note.

The details of the note creation are easily handled with a standardized boilerplate or the assistance of an attorney. Then the paperwork is recorded at the courthouse and the note deal is finalized.

If you need to know more about selling real estate with private cash flows, I will be happy to help. I am a professional Note Finder and I can help facilitate the transaction for you, as well as help you find an immediate cash settlement for the property seller after the note is created.

nInexT ISSue

How To geT more THAn THe ASkIng prIce

“noTAble”

“brAInSTorm”How creATIve Home SellerSHAve THe AdvAnTAgecreative Financing Journal™

©2008 Ipme, lllpAll rights reserved

Creative FinanCing Journal

Seller Financing: Creating A Note For Quick Sale (continued from page 3)

tM

Greetings,

My name is Marcus Brandon. As a professional note finder, I specialize in developing creative cash solutions; namely, I help note holders receive a lump sum of money in exchange for their secured real estate notes. I can also show home owners how to sell their property with seller finance.

Once a real estate note is created, it can be sold for cash shortly after the close of escrow. Existing notes can also be sold to achieve cash liquidity.

Additionally, if you are looking to purchase a paper asset for your own portfolio, I have the resources to show you many viable opportunities.

If you are an attorney, CPA, real estate agent, mortgage broker, title agent or escrow officer, I can assist you in helping your clients realize quick sales of hard-to-sell properties through the use of private financing.

If you would like to learn more about the creation and/or sale of secured private notes, please contact me directly.

Join my mailing list or subscribe to this publication by leaving me your contact information. I can be reached at 312-315-7280..

Sincerely,

Marcus Brandon

Marcus BrandonMMB Consulting

312-315-7280wWW.CASH4CASHFLOWS.COM/MBRANDON3mMBCONSULTING1@GMAIL.COM

Marcus BrandonMMB Consulting

312-315-7280wWW.CASH4CASHFLOWS.COM/MBRANDON3MMBCONSULTING1@GMAIL.COM

An “interesting” consideration

The interest rate is also a important point for buyers when they start their note evaluation process. Specifically, buyers look for interest rates that are “just right” – neither too high nor too low. Interest rates that are too high will make it difficult for the Payor to meet her monthly payment obligations, making a foreclosure likely.

Conversely, when the interest rate is too low, many buyers find that the amount they can pay for the note typically won’t meet the seller’s needs. As a result, many buyers will avoid making offers on notes with extremely low interest rates because past history has shown that these deals can be difficult to close.

yield vs. Interest = discount

Here is the critical point: the amount of the discounted offer that a seller gets from a prospective buyer is usually a direct result of the difference between the interest rate and the buyer’s yield. A note with a lower interest rate forces the buyer to make up his yield from the discount instead of the interest that accrues each month. So, as the difference between the note’s interest rate and the buyer’s desired yield grows the offer to the seller decreases.

This effect can be illustrated using two notes, both written for $100,000 and amortized over 30 years. The first has an interest rate of 3 percent and payments of $421.60. The second note is amortized at an interest rate of 10 percent with monthly payments of $877.57.

If the buyer wants to yield 15 percent on the remaining payments (with no payments made yet), the offer for the first note would only be $33,342.72 on the 3 percent note, but $69,403.63 for the 10 percent note. Remember that the balance on each note was $100,000, so the discount is $66,657.28 and $30,596.64 respectively… simply because of the difference in interest rate.

Any experienced buyer who runs these figures will realize that almost all Note Holders would find a discount of $66,000 or more on their $100,000 note very difficult to swallow. A few buyers might consider lowering their personal yield requirements in an attempt to reduce the discount – if the note has other compelling attributes.

I look forward to talk with you further about any of the strategies explained here. Please contact me if you’d like to discuss this information or for help with any of your note transactions.

Seller Financing: Creating A Note For Quick Sale brbrAInSTorm

1. Seller financing can enable YOU to sell your home quickly and easily, at the price you want.

2. It gives the BUYER a chance to purchase a home that would otherwise be out of reach.

3. If a real estate agent is involved, it allows the agent to collect a commission from a sale that wouldn’t happen through traditional means.

So everyone wins!

Turning the sale into cash

But what happens if the buyer does not put down a substantial down payment and the seller needs additional cash to purchase another property? That’s where the beauty of seller financing comes in. It’s possible for the seller – now the mortgage holder – to turn around and sell the mortgage note for a lump sum of cash!

It’s easier and more common than most people ever imagine!

As a professional Note Finder, I specialize in helping holders of mortgage notes get immediate cash for their paper asset. In fact, if you or someone you know holds a mortgage note, I can help turn it into CASH right now!

Liquidating your seller-financed notes

How a note Finder Helps It All Happen For you!

There is a growing group of note business professionals known as “Note Finders” who are making it easier than ever to sell real estate notes. These folks are individuals who help Note Sellers find a buyer. Also known as cash flow specialists or note liquidators, Note Finders collect and organize information about potential note sales so that people who buy notes can easily determine if the stream of income is right for them.

Note Finders serve to inform Note Holders of their options. They also help to streamline the process of selling a cash flow by helping Note Holders to understand the process.

Note Finders know what types of note terms, interest rates, down payments, and payment schedules Note Buyers prefer, and are familiar with typical yield notes. Therefore, an experienced finder can give home owners pertinent information to structure a new note so that it sells quickly.

As a Note Finder, I have an in-depth understanding of the private note industry and I am able to approximate the value of most secured cash flows.

Keep in mind that Note Finders do not act on the behalf of either the Note Holder or the buyer and do not provide counsel to either party; we represent ourselves. I can give you an idea of what makes a note attractive to buyers as well as present information about a note to potential buyers, but will not assist either party with the decision to finalize a note deal.

Seller financing is a popular way to sell real estate without dropping the price. In fact, builders will often offer financing to sell the properties they’ve built in a difficult market without having to reduce their prices. When the property owner is willing to “carry back” a note many advantages can result:

1. The Seller can get a higher selling price.2. The property can sell faster.3. The overall sales closing ratio can increase.4. The note can generate a steady payment stream for long-term income.

But in order to sell a house this way, the home owner needs to market the property to a different type of buyer.

Attracting “credit challenged” buyers requires a different strategy to reach a different demographic. The seller must use a more targeted marketing technique, designed specifically for the “unconventional buyer’s market.” And the most effective advertising methods to tap into this distinctly separate pool of buyers might surprise you!

(continued on page 4)

How much is a note worth?

When deciding to liquidate a seller-financed note the first step is uncover-ing how much the note is worth. To do that, it’s best to get inside the head of the Note Buyer.

Note Buyers always want a good deal, so most of them will usually begin by conducting a quantitative evaluation of the numbers on a cash flow. The two factors that buyers look at first are the note term and interest rate.

How term affects note pricing

To illustrate, consider these two similar notes with different terms. Assume that both notes have a balance of $100,000, with a fixed interest rate of 8 percent.

The first note has payments of $733.76 per month over 30 years (360 months), while the second note will be paid off in 10 years (120 months) at $1,213.28 monthly – a term three times shorter. For this example, assume that the buyer is looking to yield 15 percent on the remaining payments.

If no payments had been made towards the $100,000 balance, the buyer’s offer at 15 percent would be $58,030.25 for the 30-year note and $75,202.55 for the 10-year note. Based on the figures alone, you can see that the second note with the shorter term will receive a much higher offer.

(continued on the next column)

nTnoTAble

brbrAInSTorm

(continued)

“Seller financing is a powerful tool to remedy real estate

situations that otherwise look grim.”

PAGE 3PAGE 2

How to Sell Your House Fast - At The Price You Want!