Today I got this email from Teresa, a real estate broker:

James,

I have a buyer with a good down payment. They make good money, but they are self-employed, have less than perfect credit, and are having problems getting financing.

They have been looking to buy a home around the $300-400k range.  I would like to get you connected up with my buyer to see if they can use your creative financing techniques to make a purchase.

Let me know when you are available.

Sincerely, Teresa, Real Estate Broker

***

Dear Teresa,

I can probably help this buyer. I look forward to talking with you. It sounds like you have found the kind of buyer who can benefit from creative financing.

What is the advantage to a buyer to do seller-financing? The buyer can avoid the cost and trouble of getting bank financing.

What is the advantage to a seller to do seller-financing? The seller will have more potential buyers and can probably get a better price than if the seller insisted on the buyer getting a new loan.

As an agent, what you are looking for is a buyer who can pay at least 8.0% to 10.0% percent down. You need that much to cover closing costs and commissions and other costs. Commissions usually get paid at closing. If part of the commission is to be paid when the buyer cashes out the seller, the commission owing should be secured by a mortgage from the seller.

You are looking for a seller who has a property with equity in it. It should be obvious that seller financing is not going to work in a short sale situation. The seller should have at least 10.0% equity in the property.

If the seller has only 10.0% equity in the property, the seller’s equity will generally be cashed out. Then the buyer’s monthly payment will equal the seller’s mortgage payment.

If the seller has more than 10.0% equity in the property, either the buyer will make a larger down payment or the buyer will owe the seller his equity on a second note.

These seller-financed deals are all unique. They are structured in different ways. I believe I can put them together so that buyer and seller are secure and so the lender will not object to the transaction. I would describe exactly how I handle these deals, but the information is “proprietary”.

When I put these deals together I represent buyer or seller – not both. But I make sure that I advise the party I am not representing to get legal counsel.

Bear in mind that seller-financing is not for everybody. Some want or need to be cashed out. And some would like to have a secured note that pays 6.0% per year. That beats a savings account.

I just closed a deal like this in Pierce County. The buyer is a contractor who is going to live in the house and run his business out of it. He has bought and sold a lot of properties. Property values are down, and now is the time for those wanting a bargain price to be buying.

I believe that in many cases seller-financed transactions can be closed even when there is a due-on-sale clause in the seller’s mortgage. However, the buyer or seller needs to come see me for a consultation so I can disclose the pros and cons.

If you are a broker, don’t be shy about calling. I do not charge brokers for time on the phone.

I also handle mortgage modifications, but it is structuring seller-financed deals that I find most interesting.

Forward this to a friend. Subscribe by clicking on this link:

http://washingtonattorneybroker.com/subscribe/

James Robert Deal, Broker and Attorney
Broker with Agency One Realty LLC
WSBA # 8103, DOL # 39666
425-774-6611, 888-999-2022
James at James Deal dot com

 

Contents

4 Different Types of LLCs and the Ways They Pay Taxes

4 Different Types of LLCs and the Ways They Pay Taxes by Scott Smith | BiggerPockets.com https://www.biggerpockets.com/renewsblog/different-types-of-llcs-and-the-ways-they-pay-taxes/ The following is meant for informational purposes and is not legal advice. For...

Home Inspection Questions

What Buyers Should Ask After a Home Inspection October 9, 2018 After an inspector has finished a home report, buyers may feel overwhelmed by any flaws that might have been found. That’s why it’s important they take the opportunity to learn more so that they can move...

Door Knocking to Find Real Estate Sellers

29 Door Knocking Resources for Successful Lead Generation Posted by REDX January is the perfect time to door knock. Most people wait until the holidays are over to list their home, and more homes are listed in January than any other month. This presents a once-a-year...

How To Choose A Domain Name – by Saul Klein

Choosing Your Domain in the Age of Dot ANYTHING Written by Saul Klein Posted On Friday, 14 September 2018 13:00 · https://realtytimes.com/real-industry-news-articles/item/1019999-choosing-your-domain-in-the-age-of-dot-anything As the Internet continues to mature, the...

Mistakes Sellers Make

5 Mistakes Home Sellers Make Written by David Reed Posted On Friday, 14 September 2018 21:56 https://realtytimes.com/consumeradvice/sellersadvice/item/1020039-5-mistakes-home-sellers-make?rtmpage= There’s no shortage of advice for home buyers. Getting approved for a...

Cell Towers Reduce Property Values

Survey by the National Institute for Science, Law & Public Policy Indicates Cell Towers and Antennas Negatively Impact Interest in Real Estate Properties 94% of respondents said a nearby cell tower or group of antennas would negatively impact interest in a...

Reciprocal Easements by Prescription

Reciprocal Usage Easements? What is the Purpose? Many buildings that were constructed prior to the 1960s lacked adequate parking, and/or even on-site common usage with for ingress/egress of automobiles. In property law, ingress/egress referred to rights of a person to...

The Downside of Smart Homes

The Downsides Of Selling A “Smart Tech” House Posted on August 4, 2018Natural Living · · · · · · · Like By Catherine J. Frompovich Listen to Article Will your “smart home” become a true headache and liability when you want to sell it? Homeowners had better think about...

Where Americans Move To – Where they Moved From

Just a few years ago, experts indicated Americans (especially young Americans) were more interested in a different lifestyle than previous generations. Instead of owning a house in the suburbs, the new American dream consisted of renting an apartment in the city....

Selling FSBO Can Cost Sellers A Lot Of Money

Selling Your Home Solo to Save Money? You’ll Actually Make Less Than You Think Posted in Economist Commentaries, by Amanda Riggs on July 9, 2018 385 Some homeowners opt to sell their residence without a real estate agent to get around paying a commission and make more...

Renew the National Flood Insurance Program (NFIP)

RENEW FLOOD INSURANCE BUT QUIT SELLING NEW COVERAGE AND QUIT BUILDING NEW HOMES IN FLOOD ZONES SEA LEVELS ARE RISING Can't read or see images? View this email in a browser Have you taken action yet? Time is Running Out Dear Emelyn, The National Flood Insurance Program...

Underwater Properties – Due to Climate Change

Climate Change Will Force the Poor From Their Homes Low-Lying towns and Homes in Washington will be affected too Alamy This story originally appeared on CityLab and is part of the Climate Desk collaboration. It’s no surprise that a list of places most at risk from...

The Foreclosure Train Rolls On

The Foreclosure Train Rolls On

Private corporations such as Loan Star and Caliber bought thousands of mortgages. The government pays them to modify mortgages, but they are quick to foreclose. They invest in high value instead of low value homes. They should be required to serve the interest of the local neighborhood as are banks. They should be regulated as banks.

Author

Author

What To Serve A Goddess When She Comes For Dinner Welcome To My Book I highly recommend it. I had a lot of fun writing it. My book has 464 page book. It is 8.5″ x 11″ in size. It weighs three pounds. It is a beautiful book. It comes autographed. I can autograph it...

Seeking Lease Option and Contract Sellers

Seeking Lease Option and Contract Sellers

Seeking Lease-Option and Seller Contract Sellers  Open Phone Line to Brokers, Buyers, Sellers 425-774-6611  -  888-999-2022 I am working with several buyers who have strong income and good down payments but who have bad credit and cannot get financing.  These buyers...

Blacks Against Mandatory Vaccination

Blacks Against Mandatory Vaccination

African-American community rages against manditory vaccination in California and the Tuskegee-like crimes of mandatory vaccines that destroy black babies' lives http://www.naturalnews.com/050038_SB277_vaccine_mandate_Tuskegee_medical_experiments_African-Americans.html...

Services We Offer

Services We Offer

We have an open telephone line to brokers, buyers, sellers, and clients in general who may need help with buying or selling real estate or who may need help with mortgage modification. Services we offer: Help to Brokers, Co-Brokering Escrow Setup Lease Option Deals...

Door-To-Door Transit

Door-To-Door Transit

Door-To-Door Transit: The Only Solution To Our Traffic Nightmare by James Robert Deal, Attorney Traffic is bad and getting worse, and there is no solution in sight, as one would conclude from reading Eli Sanders’  “Welcome to Town, Here’s Why You’re Stuck in Traffic”...

Seller Financing – The Original Financing

Seller Financing – The Original Financing

AN ABBREVIATED HISTORY OF CREATIVE FINANCING The first forms of financing was seller financing. The buyer would buy personal property or real property and pay the seller on an installment basis. Over time lending houses grew up, and purchase mortgages developed....

Subscribe To Our Newsletter

Join our mailing list to receive our latest news and updates.

You have Successfully Subscribed!

Pin It on Pinterest

Share This