| Different Demographic, Better Results |
The Nefer Note Network
Different Demographic, Better Results
As explained in the last issue, seller financing can be an extremely useful option to sell a house in a
slow real estate market. Unconventional private lending is a great way to increase the overall sales
closing ratio. When the property owner is willing to "carry back" a note, it is often possible to obtain a
higher selling price and reduce the time needed to find a buyer. Plus, creating a note secured by real
estate can give the seller a steady, interest-generating income stream for their long-term future.
The Challenge: A Different Demographic
Home owners who are ready to offer a private loan in order to sell their houses are still faced with a
stumbling block: how to find buyers in need of seller financing. Most property owners don.t have any
experience in finding individuals interested in buying a "high ticket" item like a home directly from the
owner.
When property sellers work within the established real estate agent process to find buyers and close a
deal by "traditional" methods, it is generally safe to assume that the vast majority of these customers will
qualify for bank financing. In order to pursue private seller financing to sell a home, however, a property
owner will need to attract home buyers who do not have adequate credit to buy real estate - a
significantly different demographic.
The key to successfully orchestrating a seller-financed real estate deal is getting the right buyers
through the door - just like a traditional property sale.
In order to get motivated buyers interested, the seller will need to use a targeted marketing technique
designed specifically for the "unconventional buyer's market". The most effective advertising method to
tap into this distinctly separate pool of buyers is surprising to some.
Unconventional Marketing
The seller's best strategy for finding their credit-challenged buyers would be to list the property in places
that are frequented by individuals that do not have a real estate agent. The newspaper is one of the best
places to start putting out the word.
The majority of home buyers looking for seller financing start by searching the "For Sale By Owner" ad
listings in the local paper. Seller financing originated and took off via this print medium. Even in today's
Internet-dominated business world, newspaper advertising continues to be an effective means to reach
those looking for seller financed deals, so it makes sense to start the advertising here. A simple sale ad
including the line "seller financing available" or "credit issues OK" should help to generate genuine
interest from the right potential candidates.
Orchestrating the Deal
Once interested buyers start coming around, the seller can choose to work with the party that brings the
most to the closing table in terms of the down payment. Of course, larger down payments are better than
smaller amounts, but it is entirely up to the property seller to decide what is acceptable.
Once the details of the initial payment, payment term, interest rate, and any necessary clauses are
established, the buyer and seller could create a new seller-financed note. If the seller needs money
immediately to pay their down payment, the note terms can be specifically tailored to ensure that it's
attractive to cash flow buyers. Once the newly-created note is sold, the property seller will have "cashed
in" their future monthly payments for an immediate lump sum of cash.
The details of the note creation are easily handled with standardized boilerplate or the assistance of an
attorney; some note sellers are able to manage the sale of their home without any paid legal counsel at
all. In fact, once the seller understands the potential advantages of seller financing and takes the proper
steps to market the property to the target buyers, the final steps in cementing the note deal are usually
much easier than expected.
As explained in the last issue, seller financing can be an extremely useful option to sell a house in a
slow real estate market. Unconventional private lending is a great way to increase the overall sales
closing ratio. When the property owner is willing to "carry back" a note, it is often possible to obtain a
higher selling price and reduce the time needed to find a buyer. Plus, creating a note secured by real
estate can give the seller a steady, interest-generating income stream for their long-term future.
The Challenge: A Different Demographic
Home owners who are ready to offer a private loan in order to sell their houses are still faced with a
stumbling block: how to find buyers in need of seller financing. Most property owners don.t have any
experience in finding individuals interested in buying a "high ticket" item like a home directly from the
owner.
When property sellers work within the established real estate agent process to find buyers and close a
deal by "traditional" methods, it is generally safe to assume that the vast majority of these customers will
qualify for bank financing. In order to pursue private seller financing to sell a home, however, a property
owner will need to attract home buyers who do not have adequate credit to buy real estate - a
significantly different demographic.
The key to successfully orchestrating a seller-financed real estate deal is getting the right buyers
through the door - just like a traditional property sale.
In order to get motivated buyers interested, the seller will need to use a targeted marketing technique
designed specifically for the "unconventional buyer's market". The most effective advertising method to
tap into this distinctly separate pool of buyers is surprising to some.
Unconventional Marketing
The seller's best strategy for finding their credit-challenged buyers would be to list the property in places
that are frequented by individuals that do not have a real estate agent. The newspaper is one of the best
places to start putting out the word.
The majority of home buyers looking for seller financing start by searching the "For Sale By Owner" ad
listings in the local paper. Seller financing originated and took off via this print medium. Even in today's
Internet-dominated business world, newspaper advertising continues to be an effective means to reach
those looking for seller financed deals, so it makes sense to start the advertising here. A simple sale ad
including the line "seller financing available" or "credit issues OK" should help to generate genuine
interest from the right potential candidates.
Orchestrating the Deal
Once interested buyers start coming around, the seller can choose to work with the party that brings the
most to the closing table in terms of the down payment. Of course, larger down payments are better than
smaller amounts, but it is entirely up to the property seller to decide what is acceptable.
Once the details of the initial payment, payment term, interest rate, and any necessary clauses are
established, the buyer and seller could create a new seller-financed note. If the seller needs money
immediately to pay their down payment, the note terms can be specifically tailored to ensure that it's
attractive to cash flow buyers. Once the newly-created note is sold, the property seller will have "cashed
in" their future monthly payments for an immediate lump sum of cash.
The details of the note creation are easily handled with standardized boilerplate or the assistance of an
attorney; some note sellers are able to manage the sale of their home without any paid legal counsel at
all. In fact, once the seller understands the potential advantages of seller financing and takes the proper
steps to market the property to the target buyers, the final steps in cementing the note deal are usually
much easier than expected.
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