Abracadabra! Seller Financing Can Be Magic!

By David P. Butler

For centuries, seller financing has been a magic formula that makes almost anything of value - MORE SALABLE! This is particularly so in certain economic cycles, like the one we appear to be entering NOW! A majority of real estate listings expire, UNSOLD. Were the sellers and agents waiting for that elusive "cash to new loan" buyer?

For real estate agents, business brokers, and manufactured home dealers and brokers - Seller-carryback financing can make the difference between a SOLD or an EXPIRED listing.

Those sellers, and their agents, who understand and utilize seller carryback financing - make more sales. The reason? There are always MORE buyers who can make monthly payments, than there are who have all cash; or have the ability to borrow institutional financing to get all cash - or have the desire to use traditional financing. If someone would finance the balance of the purchase price, these prospective buyers will become actual buyers... even in slow times!

The best ALTERNATIVE then, is for the seller to finance the sale of his property by deferring all, or a portion of the purchase price for his equity in that property, by carrying back a private note and a mortgage, trust deed, or land contract - generally secured by the property sold. The term given to such owner financing is "seller-carryback financing", or more specifically, seller-carryback purchase money financing.

Some advantages of seller carryback financing to the seller...

Larger number of prospective buyers, for a quicker sale.

Getting a top price by taking terms rather than all cash.

Deferring taxes now on any gain by using an installment sale, if seller held property for investment, trade, or business.

Receiving a higher interest rate than if you put the proceeds from a cash sale in the bank, a CD, or money market fund.

Monthly income secured by property you understand and whose value you know.

An Agent's Perspective

For most real estate agents, the ultimate question is "How am I going to find a buyer for this seller's property?" The typical response to that question for most agents is centered around advertising the listing, putting up signs, holding an "open house", entering listing on MLS, and arranging for their local Board to caravan the property. Look at your own marketing methods.

Advertising, signs and open houses are part of marketing. But if signs, advertising and open houses were the primary tools needed to effectively market property, wouldn't all properties soon be sold? Obviously, more is involved.

SELLER FINANCING or OWNER WILL CARRY are words you can add to your FOR SALE signs and other forms of advertisement. These words will attract a larger number of prospective buyers. "Owner will carry" sets your property apart from sellers who are waiting for that elusive all-cash buyer. Adding the words "Seller Financing" or "Owner Will Carry" can be the quickest way to change a "For Sale" sign into a "SOLD" one!

Sold!

Many sellers think they need all cash. And many real estate agents THINK they need an all cash sale. A cash transaction is SIMPLE, so they don't have to be creative. In certain economic cycles that is true. But in "down cycles" things get much dicier.

Many sellers need agents who know how, or who to turn to, to help structure a seller-financed transaction properly to maximize the safety, security of the note being created, AND... the possible future salability of that note, in the event the seller needs more cash at some point in the future - whether at the closing table, or later on down the road.

About the author... David P. Butler is the owner of Hotspur Consulting Services financial brokerage and consulting firm. David is also a licensed mortgage and real estate broker. He has been investing in real estate and discounted cash flows since 1977.

This article about Seller Financing is provided as a public service by:
www.Cash-Now-Seller-Financing.com
Where We Help You Create The Mortgage Notes That We Buy For Cash!!!

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