Seller financed home
There are more seller financed notes being drawn up to sell homes with the banks in lending turmoil. If you are holding a note and need to sell how do you go about it.
Instructions
1. Real estate notes have a ready market. You can sell to individual investors or to banks and other institutions. The investor who buys your note will be interested in several things. These items will determine what they pay you in a lump sum and if and how much they discount the face value of the note.
2. Is the note seasoned? This simply means has the buyer made payments and for how long. A buyer with no late payments for a year will help the note sell better than a buyer that is always late.
3. What is the buyer who makes the payments credit score? A credit score above 720 will be easy to sell. A person on the note with a score of 650 should be O.K. If the person who is making the loan payments has a credit score below 600 the note can still be sold but will probably be discounted by th investor for the risk.
4. Is there equity in the property, and how much? If the investor buying the note is in first position with substantial equity in the home it will sell closer to face value and not be as likely to be discounted.
5. What is the interest rate paid on the note? How long is the remaining term of the note. Short term notes sell for a higher value and the higher the interest rate the better the note will sell and for a higher price.
6. You can find private note buyers and institutional note buyers in an online search. Many local note buyers advertise in the local classified newspaper ads. A local real estate investment club may also have people who buy notes in attendance.
7. One last item to consider is do you need to sell the note outright or can you sell a partial amount of the note. Perhaps you don't need to raise the whole amount. If you just need a small amount you may be able to sell a certain amount of payments at a set interest rate.Maybe 2 years of payments for the amount you need. After the term the payments would revert back to you.
