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SIMULTANEOUS CLOSINGS
"HAVE YOUR CAKE AND EAT IT TOO"
Simultaneous closings allow a seller to advertise and give seller financing and
then get cash for the note immediately following the close on the purchase of
the home. It is almost exactly like receiving cash, and can often make the
difference in realizing a quick sale at full price.
What Is A Simultaneous Closing?
A simultaneous closing is a technique that allows a seller of real estate to use the
considerable benefits of offering seller financing to the buyer and yet still receive cash at the closing
of the transaction. Technically, there are two closings. At the first, the seller and
the buyer close the purchase and the buyer signs a note payable to the seller. At the second
closing, which occurs a short time later, the seller sells his note and walks away with cash.
It is important to note for legal reasons that the investor purchasing the note is not making
a loan but rather is purchasing a note from the seller. The seller is the one that made the loan!
What Are The Advantages?
First of all the program described below offers simultaneous closing financing for non-conforming
loans which is the carrot that produces all of the advantages below. While there
are investors that will do simultaneous closings on conforming loans they are typically
more expensive than banks so I do not recommend that you use them. The program described
below, however, is another tool you can put in your arsenal that will greatly increase
your chance of a quick sale at full price and does not stop you from still trying
to appeal to high credit rating buyers also.
- Attract more Buyers - Advertising your property as
"seller financing" increases dramatically the number of buyers
that will look at your property. The additional buyers are
those that do not qualify for conventional financing so you
are no longer competing only with those buyers that are looking
at all the other homes on the market--your property becomes "special".
- Don't Reduce Your Price - Most "experts" will suggest
that you reduce the price if it doesn't sell in the first 2-4 weeks
it's on the market or if you want a quick sale. Lower prices do not make your property special,
they only make it cheap which in itself often leads to lowball offers.
- Full Price Offers - Your buyers are much more likely
to pay full price because they know there is a demand for your
property and they know they need your financing to buy a home.
- Results are Guaranteed - There are no upfront costs,
so you only pay if it works for you. You are guaranteed to receive
more money for your home even after the fee--if you don't you just
don't accept their offer.
- Don't Waste Time On Unqualified Buyers - There is a easy to use system that you can use to prequalify
your buyers. Once prequalified in this system, over 90% are
approved.
- Buyer Advantages - There is no PMI and no loan origination
fees and the approval process is usually much shorter.
Some Common Requirements
Following are some common requirements required by the private investors
willing to purchase this product. Note, however, that these change so always call
and check prior to structuring a deal.
- A down payment of at least 5% on residential owner-occupied properties
and 10% on residential investment or commercial property.
- A minimum sales price of at least $50,000 for residential properties.
- The property must appraise at the sales price with a full inside and
outside appraisal by a certified appraiser.
- The FICO score of the buyer can be below the 678 national average
but should be 520 or above on owner-occupied, residential property;
585 or above on residential investment and commercial properties. Note:
stated income applications normally require a FICO of 620 or above.
Your buyer will be required to purchase his actual FICO score. He can
do that here
by ordering the Experian FICO score for $12.95 or from all three agencies
for only $38.95.
- PITI can be as high as 45% of income compared to 28% in conventional financing.
If you are thinking of using this product please give us a call and we will help
you structure your deal.
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