Seasoned Simultaneous Closing
What
is a simultaneous closing?
It
is a process by which someone selling
their property can carry the note or
take back
the note on
the property and sell the seasoned note at
the same
time they close on
the sale of
the property. Thus
they sell
the property and
the note virtually at
the same time.
Why use a simultaneous closing?
If you ask someone when
they are trying to sell their property if
they would consider using owner financing
to help sell
the property
they would give you two reasons why they would not
want
to do owner financing. The first
reason is
that
they do not
want
to be a bank and collect
payments. The second objection
to using owner financing is
that
they need more
than just
the down payment. Using a simultaneous closing would eliminate both of
these objections.
How it works
To structure the deal three key elements of information need
to be known. How much
the seller needs to walk with from
the deal? Secondly
the fair market
value of
the property. And thirdly a good description of
the property. A seller is
trying to sell their property for $100,000 but
can not
sell it
for some reason. The fair market
value of the property is $115,000 using a simultaneous closing
the deal would be structured as follows:
Sale
Price $115,000
Down Pmt
$11,500
1st
Mortgage $103,500
30 year
term, 9% , monthly pmt
$832.78, 7 yr balloon = $96,918.39
The funding source offers $93,000 for
the note. We can get
the broker a fee and also give
the seller exactly what
they said
they needed out
of
t
he deal.
Funding source offer $93,000
$104,500
+ Down Payment
$11,500 - $100,000
what
the seller needed
$104,500 $4,500 broker
fee
Funding source offer $93,000
seller gets two checks:
Broker fee
- $4,500
check #1 $11,500 down pmt
Net
for
the note $89,500 check
#2 $89,500 net
for
the note
$100,000
total seller receives
The actual purchase of
the note would occur
two or
three days after the sale of the property. In
those
two to
three days
the funding source is verifying all of the specifics of the closing and sale of the
property. Once
the closing has been verified the funding source will either wire the money to
the seller or send
them a check for
the note. The simultaneous closing process can work with either a residential or commercial property.
Advantages
A realtor loses several sales a year because
the buyer can not
qualify. Using owner financing
the qualifying parameters are more flexible than conventional financing. Someone could qualify
to buy
the property
that
might
not
qualify using conventional financing resulting in a sale for the realtor. I
It
will be easier for someone to sell their property because
the qualifying criteria is easier for the buyer
to qualify.
The closing costs using owner financing will be considerably less
than using conventional financing. The only
true costs are a credit check, appraisal and
title work. There will be some other minor costs such as documentary stamps. On a percentage basis
the closing cost
are considerably less. There are never any points charged weather it
is a residential or commercial property.
Legalities
As a certified cash flow specialist
you can not talk to both the seller and
the buyer to structure a simultaneous close unless you have a realtor and or a mortgage lender
license. You can however
talk
to either
the seller or the buyer and show them how a simultaneous closing would work. The end
result
will be
the same: an easier way for the seller
to sell
their property and an easier way for a buyer to get
into a property.
Click on Contact Us for more
information or complete a note
submission worksheet.
E-mail us at: funding@sgedistribution.com