| The Seller Finance Solution |
The Nefer Note Network
 |
 |
 |
 |
 |
The Seller Finance Solution
Seller financing can be a great way to get a house sold without slashing the price. By recognizing the
millions of people who can't get traditional financing as potential buyers, resourceful property sellers
(and their real estate agents) can minimize their time investment in getting a property sold. Even better,
sellers who offer financing can usually get a higher asking price for their property, even in the slowest
markets. Clearly this is a win-win situation.
Most home sellers never consider financing the buyer directly because they are not aware of the benefits
or don't fully understand how creating a note works. Let's take a closer look at the advantages of owner
finance.
Three Advantages
Seller financing is very powerful when the market is slow or when there are many similar houses on the
market. Just listing the house as "OWC" - Owner Will Carry - will make the house stand out and attract
more buyers. Because many individuals cannot get funding from a bank, offering financing will open the
doors to these prospective customers as well, essentially significantly increasing the pool of potential
buyers. So, advantage #1 is MORE BUYERS.
Seller financing also brings the property seller another critical advantage . the likelihood of selling for a
higher price. Offering to carry back a note will not only greatly increase the number of potential buyers, but
also bring a unique demographic of buyers who are willing to pay more for a given property than the
general population. Advantage #2: MORE MONEY.
Additionally, when the property seller finances the buyer, they get to act as "the bank". That means they
could structure the deal to collect interest. Over time, if the seller holds on to their note, this can add up to
tens of thousands of dollars in additional income. Advantage #3: LONG TERM PROFIT.
The Seller's Strategy
Even when these benefits to "carryback" lending are made clear, many sellers are still hesitant to offer
financing because they are entering unfamiliar territory. It's a natural, human response -- everyone is
uncomfortable with new things.
For many property sellers, considering owner financing when they've only dealt with buyers via traditional
funding is definitely "thinking outside the box". But once sellers understand the process, they are likely to
choose seller financing instead of the unattractive option of cutting the listed price or waiting indefinitely
for the "right buyer".
A seller-financed real estate sale is simply a real estate transaction where the seller acts as "the
bank" or lending institution. The seller sets the sales price, determines and accepts a down payment,
and then finances the remaining balance. The final step is the part that may scare some sellers, but in
actuality, it can be very simple. Here is an example.
If the sales price is $100,000.00, and the buyer gives the seller $10,000.00 cash (the agent.s fee will be
deducted from this down payment), the seller will finance the balance of $90,000.00. The buyer and
seller would then agree to the terms, such as the interest rate and the total term, and use an attorney to
create the mortgage document and close the deal. From that point on, the buyer sends the seller
monthly payments for the house he/she has just purchased.
Special Circumstances (and a Solution)
The whole process can really be that simple. But, there are some substantial differences between a
seller-financed deal and one that relies on traditional bank funding.
First of all, the seller in this example does not receive a large, one-time payment at the time of the sale.
In fact, they will only receive the down payment, and in some situations, most of that will go towards
paying the real estate agent's fee. On the other hand, the seller will be receiving monthly payments at a
decent interest rate, but this income stream can't be used as a down payment for a new house.
Since many home sellers are also looking to buy another property, the seller will need to get enough at
closing to pay their own down payment. Without this payment, the seller's hands will be tied when they
look to purchase another house and need to have a substantial amount of funds available. There is a
common solution to this issue, however.
The Solution
In order to get the money the seller needs from the loan they just created, the seller could sell the
monthly note payments to a specialist buyer for a lump sum of cash. If the seller finds someone willing
to buy the payments, now they can "have their cake and eat it too".
In summary.
Step one: Use the seller finance option to find unique customers willing to buy the house at a higher
price than would have been possible otherwise and complete the real estate transaction quickly.
Step two: Decide on the terms of the deal and create the note.
Step three: If the property seller needs immediate cash to buy another house or for any other reason,
their new incoming payment stream can be resold. The person who buys the future payments from the
seller will provide the funding to act as a down payment on a new house, and every party involved in the
deal comes out smiling.
Seller financing can be a great way to get a house sold without slashing the price. By recognizing the
millions of people who can't get traditional financing as potential buyers, resourceful property sellers
(and their real estate agents) can minimize their time investment in getting a property sold. Even better,
sellers who offer financing can usually get a higher asking price for their property, even in the slowest
markets. Clearly this is a win-win situation.
Most home sellers never consider financing the buyer directly because they are not aware of the benefits
or don't fully understand how creating a note works. Let's take a closer look at the advantages of owner
finance.
Three Advantages
Seller financing is very powerful when the market is slow or when there are many similar houses on the
market. Just listing the house as "OWC" - Owner Will Carry - will make the house stand out and attract
more buyers. Because many individuals cannot get funding from a bank, offering financing will open the
doors to these prospective customers as well, essentially significantly increasing the pool of potential
buyers. So, advantage #1 is MORE BUYERS.
Seller financing also brings the property seller another critical advantage . the likelihood of selling for a
higher price. Offering to carry back a note will not only greatly increase the number of potential buyers, but
also bring a unique demographic of buyers who are willing to pay more for a given property than the
general population. Advantage #2: MORE MONEY.
Additionally, when the property seller finances the buyer, they get to act as "the bank". That means they
could structure the deal to collect interest. Over time, if the seller holds on to their note, this can add up to
tens of thousands of dollars in additional income. Advantage #3: LONG TERM PROFIT.
The Seller's Strategy
Even when these benefits to "carryback" lending are made clear, many sellers are still hesitant to offer
financing because they are entering unfamiliar territory. It's a natural, human response -- everyone is
uncomfortable with new things.
For many property sellers, considering owner financing when they've only dealt with buyers via traditional
funding is definitely "thinking outside the box". But once sellers understand the process, they are likely to
choose seller financing instead of the unattractive option of cutting the listed price or waiting indefinitely
for the "right buyer".
A seller-financed real estate sale is simply a real estate transaction where the seller acts as "the
bank" or lending institution. The seller sets the sales price, determines and accepts a down payment,
and then finances the remaining balance. The final step is the part that may scare some sellers, but in
actuality, it can be very simple. Here is an example.
If the sales price is $100,000.00, and the buyer gives the seller $10,000.00 cash (the agent.s fee will be
deducted from this down payment), the seller will finance the balance of $90,000.00. The buyer and
seller would then agree to the terms, such as the interest rate and the total term, and use an attorney to
create the mortgage document and close the deal. From that point on, the buyer sends the seller
monthly payments for the house he/she has just purchased.
Special Circumstances (and a Solution)
The whole process can really be that simple. But, there are some substantial differences between a
seller-financed deal and one that relies on traditional bank funding.
First of all, the seller in this example does not receive a large, one-time payment at the time of the sale.
In fact, they will only receive the down payment, and in some situations, most of that will go towards
paying the real estate agent's fee. On the other hand, the seller will be receiving monthly payments at a
decent interest rate, but this income stream can't be used as a down payment for a new house.
Since many home sellers are also looking to buy another property, the seller will need to get enough at
closing to pay their own down payment. Without this payment, the seller's hands will be tied when they
look to purchase another house and need to have a substantial amount of funds available. There is a
common solution to this issue, however.
The Solution
In order to get the money the seller needs from the loan they just created, the seller could sell the
monthly note payments to a specialist buyer for a lump sum of cash. If the seller finds someone willing
to buy the payments, now they can "have their cake and eat it too".
In summary.
Step one: Use the seller finance option to find unique customers willing to buy the house at a higher
price than would have been possible otherwise and complete the real estate transaction quickly.
Step two: Decide on the terms of the deal and create the note.
Step three: If the property seller needs immediate cash to buy another house or for any other reason,
their new incoming payment stream can be resold. The person who buys the future payments from the
seller will provide the funding to act as a down payment on a new house, and every party involved in the
deal comes out smiling.