Selling your business can be a difficult and frustrating experience. In many cases, it may be difficult or even impossible for a potential buyer to be able to finance the entire sales price through a bank or mortgage lender. Many lending institutions are hesitant to offer financing for what they may consider a risky expenditure. Often times, in order to achieve a successful sale, a business owner needs to offer some type of seller financing.

Of course, as a business owner, you may be reluctant to finance the sale yourself. That's completely understandable. However, if you're serious about selling your business, you may not have a choice. You may find it necessary to carry at least part of the purchase price in order to complete the sale. But, by following some simple guidelines, you can protect your investment and make this endeavor much safer.

1. Always insist that your note is guaranteed by an individual, not a corporation.
2. Obtain a credit report on all parties involved in the sale. Look for a credit rating of at least 640. Higher is better, but 640 should be the minimum you consider.
3. Carefully consider the financial strength of your buyer and the strength of his/her personal guarantee. Examine the net worth of your buyer and compare it to their debt load.
4. Consider the buyer's previous experience in this particular business field, as well as his/her previous management experience.
5. Insist on a large down-payment. Try to get at 40% of the purchase price in the down-payment. Do not consider less than 30%.
6. Document and verify the source of the down-payment. Down-payments which come directly from the buyer are preferred. Monies borrowed from friends or relatives to cover the down-payment are less attractive, but better than no down-payment.
7. Short payment terms are preferred over longer terms. Generally, terms of 30-60 months are offered. Ten years is the longest term recommended. The note should be fully amortized.
8. The interest rate on your note should be competitive. Prime lending rate + 2-3 % is a good guideline to use.
9. Your business should be fully evaluated before the sale, with the value firmly established and documented. All tangible assets, including both current and fixed assets, should be thoroughly documented and the value clearly indicated and confirmed, along with the method of valuation. Real estate, if included with the sale of the business, needs to be fully appraised and documented also. Intangible assets, such as liquor licenses, franchise agreements, leasehold agreements, etc. should be included in the business appraisal and the method of their valuation should be indicated as well.

These are only a few of the things you can do, as a business owner, to protect your interests in the sale of your business. There are many other considerations as well.

Will you be able to sell your business note as soon as it is created? Probably not. Generally, the best pricing is obtained on notes which have been seasoned for at least 12 months. It's not impossible to sell the note before that point, but you should be prepared to take a larger discount if you do.

If your note is not in first position (i.e. a first mortgage), it is not likely to find an interested buyer. When you sell your business, you should always make sure your note is in the senior position. 

If you do elect to sell your business note, you will need to provide:

• documentation supporting the sales price of the business
• financial records, both before and after the sale of the business
• proof that all payments have been made on time
• other details regarding the business, such as how long the business has been operating at the present location, whether the business has moved recently, and if so, why

Are all business notes sellable? Unfortunately, no. Some types of business notes are unlikely to find a buyer. These include notes secured by businesses such as video stores, insurance agencies, law firms, travel agencies, real estate agencies, and smaller tax preparation firms. It may not be impossible to find a buyer for these kinds of business notes, but it is likely to be more difficult and the discount is likely to be steeper.

Do you have to sell your entire business note? No. Partial purchases are very common when dealing with business notes. Often, a note investor will consider a partial purchase a less risky investment than a full purchase. You gain an advantage this way as well. As your note ages, it increases in value. If you do decide to sell the rest of your note in the future, it will likely be more valuable because of the longer payment history and the greater equity value associated with the note.

If you are planning on selling your business and considering seller financing as an option, or if you are currently holding a business note which you would like to sell, please contact us. We, at First Class Cash Flow Handlers will be happy to answer any questions you have. 

The real estate "bubble" has been big news for quite a while now. With interest rates low and real estate prices high, the biggest question on everyone's mind seems to be "Will the bubble burst?" and "When will it happen?"

I can't tell you exactly when it will happen, but eventually, it will happen. So, what does that mean for the private cash flow industry?

With interest rates low, more buyers are able to qualify for traditional bank loans. With more people qualifying, home sellers are usually able to sell their property fairly easily, even through the traditional means of requiring the buyer to qualify for a loan through a bank or other lending institution.

However, as interest rates start to increase, fewer buyers will be able to qualify for large loans. This will mean fewer potential buyers. With fewer buyers in the market, the laws of supply and demand guarantee that real estate prices will start to decrease as well. Basically, fewer qualified buyers = fewer potential real estate buyers = less demand for real estate = lower pricing on real estate.

What does that mean for you, as a seller of real estate? It means that if you are unable to sell your home through traditional means, you may need to consider less traditional approaches. Seller financing is one approach that can be quite successful in selling your home or property. Why? Because, seller financing provides easy terms for potential home buyers who might not otherwise qualify to purchase your home through more traditional approaches. Easier terms means an easier sell! It also often means being able to sell your home at its fair market value, instead of having to reduce your price in order to sell.

Does this mean that you should extend financing to the first buyer who walks through the door and says, "I want the house". Absolutely not. You need to qualify your buyer just like a bank would. The only difference is that your criteria for qualification do not need to be as rigid as a bank's. You don't care whether the buyer just moved into the state or has changed jobs recently. You don't care whether the buyer is recently divorced. You simply want to make sure that your buyer can afford to make the monthly payments on your home. (By the way, recent moves, job changes, or divorces can all be reasons for being denied financing by a traditional lending institution such as a bank, even when the buyer is able to afford the payments. Banks and lending institutions don't like to see changes in a lender's history.)

Are you interested in offering owner financing to help you sell your home, but hesitant to do it because you need cash up-front immediately after the sale? No problem. If that's the case, you can sell all or part of the note you create when you sell your home and get immediate cash for it. First Class Cash Flow Handlers can help you. We buy and sell seller financed notes. Contact us to learn more.

Selling your home or other real estate property is a big decision. While offering owner financing can make selling your property much quicker and easier, there are a number of pitfalls you will want to avoid.

When creating a cash flow note, whether it is in the form of a mortgage or trust deed, the main objective is to create a low risk investment. By doing so, you:

1. Create a solid investment for yourself, with very little risk of default.
2. Create a liquid investment which you can convert to cash, if necessary.

The three most common mistakes made when creating a cash flow note are:

• Bad credit
• A poor appraisal of the property
• Clouded property title

Bad Credit: Finding the right buyer for your property involves much more than simply finding a person who loves your home. Before entering any agreements, you need to obtain a credit history on all parties involved.

Many people are concerned about whether they have the right to request credit information, under the federal laws. Because you are effectively loaning money to the potential buyer, you absolutely have the right to request access to their credit information. You should require a completed credit application from any potential buyer. This application should include permission from the potential buyer to pull their credit report.

If a potential buyer does not want to give you information about their credit, then decline to offer any owner financing to that person.

Once you have obtained the credit report, examine it thoroughly. The credit rating is important, but you should also look at the rest of the information available. In particular, look for any reports of defaults, late payments, etc. on the credit report. Look at the amount of income as well. You need to be comfortable that your buyer is willing and able to make the payments on your property every month.

Poor Appraisal Of Property: The property should be appraised at or near the sale price. If the sale price is higher than the appraised value of the property, this can create problems in the event of a default. You may actually end up losing money on the deal if you need to foreclose on the note and resell the property.

An appraisal value which is less than the balance due on the note will also significantly reduce the value of your note.

You will also want to be able to monitor the property periodically after the sale. Making certain that the property is kept in good condition will allow you to make sure that the property retains its value. In the event that foreclosure becomes necessary, it is very frustrating to find a property that needs numerous repairs before it can be resold.

Clouded Property Title: A clouded property title means that ownership of the title is unclear. A clouded property title may result from a previous lien on the property that was never satisfied, association liens, mechanics liens, or delinquent property taxes. It is also possible that the chain of title is out of order. Whatever the cause, you should correct the problem before the property sale.

A clouded property title, if discovered during the negotiation process, may weaken your bargaining position, or even be a reason for not completing the sale. If discovered after the sale of the property, a clouded title will lower the value of your note.

If you are thinking of selling your property and are considering offering owner financing, we urge you to contact First Class Cash Flow Handlers for more information. We also recommend the manual "How To Sell Your Home Fast In Good Or Bad Markets". This manual will walk you through the process of selling your home with owner financing step-by-step.

Are you looking to purchase a real estate investment with no money down? Is so, seller financing can help you accomplish that goal. Here's how:

First, make sure the property that you are interested in is owned free and clear. You don't want any liens on the property popping up to create problems with your plans.

Secondly, you'll need to find a home seller who is willing to carry-back an owner financed note on the property.

Let's assume that you've located a nice, well-kept single family home in a good neighborhood. The owner of the property is asking for $160,000 and wants at least 10% down ($16,000). The property is owned free and clear, and the home seller is willing to take-back an owner financed loan. But, the home seller is adamant about the down-payment. He won't sell without it.

Instead of simply walking away from the home, consider using seller financing to create the down-payment for you.

How do you do that? There are actually many ways. We're going to discuss one way to do it here.

For this method to work, you're going to need to create two separate owner financed mortgage notes. (Trust deeds can be created in the same fashion if necessary.)

The first mortgage will be in the amount of $100,000, amortized over 30 years with a 10% interest rate. The monthly payment amount will be $877.

The second mortgage will be in the amount of $80,000, amortized over 30 years, with a balloon payment due in 15 years. The interest rate on this loan also is 10%, the monthly payment is $702 and the balloon payment due in 15 years will be $65,331.

The next step is selling the first mortgage note. Let's assume that you receive $80,000 as a lump sum in return for selling the entire amount of the first mortgage. What that means to you is that you now have $80,000 available to offer in lieu of a down payment. Though you are paying $20,000 more than the asking price for the home, you benefit by buying the real estate without an out-of-pocket downpayment. You will pay for the home over the next 30 years, $1597 per month ($877 + $702) for the first 15 years, and then $877 per month for the next 15 years. At the end of the first 15 year period, you will either pay off the $65,331 balloon payment or refinance it with a banking institution.

How does the home seller benefit? First, instead of a down-payment of only $16,000, he gets a down-payment of $80,000! That's a whopping 50% down-payment on the asking price for his home. Then, over the next 15 years, he receives a payment from you of $702 every month plus a balloon payment of $65,331 in 15 years. That's a total of $191,691 that Mr. Home Seller receives over the next 15 years, in addition to the $80,000 down-payment resulting from the sale of the first mortgage. Not a bad deal at all!

In the scenario above, the home seller actually received the full asking price of $160,000 for his home. You came out a winner because you purchased the property with no out-of-pocket down payment. The seller came out a winner because he not only received his full asking price, but received a much larger down-payment than he was expecting. A win-win situation for both parties.

However, in many situations, you may be able to negotiate with the home seller over the conditions of the sale. For instance, instead of offering the full $80,000 in lieu of a down-payment, you may find that the home seller will agree to receiving a $70,000 down-payment with a negotiated selling price of only $150,000 for the property in consideration of the large down-payment. If your seller agrees to this, what do you think will happen to the additional $10,000 received at the selling of the first mortgage? That $10,000 is yours to keep! That brings your total purchase price down to $170,000, still with no out-of-pocket down payment.

Now, imagine that. You have just bought a single family home with no down-payment, and put an additional $10,000 in your own pocket at the same time. How do you think that would make you feel? What if you could get the home seller to agree to accept a $60,000 down payment and a total selling price of $140,000? How good are your negotiating skills? 

The above scenario is only one possibility. There are endless opportunities and countless ways to structure a note which will benefit both the buyer and the seller. First Class Cash Flow Handlers can help you work out a solution to fit your own individual needs. Contact them by e-mail or call them directly at (401)258-7158.

Did you receive a court settlement as a result of an accident, injury, or illness?  Are you now stuck collecting small monthly payments when you really wanted all of your money up front?  After all, the money is yours, right?  Why should you have to wait for years to collect all of it?

Well, the good news is that you do have another option.  Did you know that the structured settlement that you're receiving right now is a liquid asset that can be sold for cash?  Did you know that you can sell your structured settlement and receive a large lump sum of cash in return for it? 

Yes, it's true.  You don't need to settle for those small monthly payments any longer.  You can trade in those payments for a large cash payment immediately? 

Why would you want to sell your structured settlement?  There are many good answers to that question and the answer will vary from one person to another.  The bottom line is likely that you need money immediately.  You may have had to wait a relatively long period of time to receive your court settlement and you may have incurred numerous debts while you were waiting.  You may not have been able to work for a time and the bills may have accumulated as a result.  You may have incurred medical bills as a result of the injury or accident which earned you the settlement.  Those medical bills will need to be paid sooner or later.  It's even possible that you waited for your court settlement intending to pay off all of your debts, only to find that the monthly payments do not allow you enough funds to be able to do so.  Whatever the reason, you do have the right the sell your structured settlement.      

How does the sale of structured settlement work?  Essentially, a structured settlement involves a third party (the defendant in your court case) purchasing an insurance policy in your name, which pays you a pre-determined amount of money at specific time intervals.  For instance, your structured settlement may pay you $XXX.XX amount of dollars monthly, or quarterly, or yearly.  The details will vary depending on your individual circumstances, but the common denominator is a structured cash settlement paid to you, as ordered by the court or defined in a settlement, at a regular time interval. 

You may have heard, or even been told by your financial advisor, that you are not allowed to sell your structured settlement.  Strictly speaking, that statement is true.  You are not allowed to sell the actual insurance policy which was created in your name.  This insurance policy is the instrument which guarantees you that the payments will be made regularly, as promised. 

However, you are allowed to sell the right to collect the payments on that policy, which in essence, is what is referred to as "selling your structured settlement".  This is completely legal and is done relatively commonly.  You've probably even seen the commercials on TV and heard them on the radio.  There are numerous companies, both small and large, which will "purchase" your structured settlement from you.

What can do with the money you receive when you sell your structured settlement?  You can do anything you like with it!  It's your money.  You can use it to pay off medical or credit card debt.  You can use it to fund your retirement, purchase a new home, a new car, fund a college education, take a vacation, buy a business, start a new career, invest, play the stock market.  It's entirely up to you to decide. 

Is selling a structured settlement right for everyone?  No, absolutely not.  In fact, we urge you to consider your situation carefully.  Some people like the security of a guaranteed payment every month.  For some people, having their money come to them slowly over time makes it less likely that they will spend the money frivolously.  And selling your structured settlement will also involve accepting less than the full value of the settlement.

When and if you do sell your structured settlement, it is unlikely that you will receive the entire cash value of the settlement.  It is unusual for a settlement not to be sold at a discount.  There are a few reasons for this, but the most important of these reasons is what is known as the time value of money.  What this means is that the dollar you hold in your hand today is worth more than a dollar you may hold in your hand 10 years from now.  Some people call this inflation, some know it as the rising cost of living.  Whatever you want to call it, most of us are at least vaguely aware of the principle, even if we don't know it by name.  For instance, we all know that it costs more to go to a movie today than it did 10 years ago.  It costs more to buy gasoline today than it did 10 years ago.  It cost more to buy clothing or food than it did 10 years ago.  And it stands to reason that 10 years from now, it will be even more expensive to purchase these items. 

So, what does that mean to you in selling your structured settlement?  By selling your structured settlement today, you are exchanging dollars received today for dollars promised in the future.  And that's where the time value of money and the discount come in.  Let's say, for instance, that you were rewarded a total sum of $120,000 payable to you in monthly installments over the next 20 years.  You sell the payments awarded to you in your structured settlement for $100,000.  That means you will receive $100,000 today.  For you, that's a great thing.  But the person who just paid you that $100,000 has to wait for the length of the term to collect all of the money due.  This means that person has to wait for 20 years to collect all of their money back.  Twenty years from now, those dollars will purchase far less than the same amount of money would purchase today.  Are you beginning to see why the discount is applied?  (*Note: these numbers are only used as an example and are not meant to indicate what you might expect to be paid for your own settlement.)

Is selling your structured settlement right for you?  The truth is only you can answer that.  It will depend on your individual situation, your individual needs and your expectations. 

First Class Cash Flow Handlers buys structured settlements, as well as any other type of cash flow note.  For more information, visit our cash flow website, or call us at (401)-258-7158.

Default 

If the Borrower fails to perform any significant part of the contract, the Seller may have the right, after notifying the Borrower in writing of the exact nature of the default, to take legal action.  If the default continues, the Seller probably has the right to declare the remaining balance due and payable and, if the default is not then cleared up or the loan is not paid in full, the Seller can begin foreclosing. 

Defaults by the Borrower may include failure to properly maintain the property, failure to adequately insure the property, or failure to pay taxes on the property as they become due.

The way Borrowers most commonly default is, as you would expect, by failing to make timely payments.  If a payment is ever late, we recommend taking the following steps:  (1) Check the contract to see if a “grace” period exists.  If so, you must honor it.  (2) If no grace period exists or if it has expired, phone the Borrower and ask about the payment.  Insist upon payment, make a note of the date and time of the call and keep this information with your land contract.  (3) On the same day as the above phone call, write a letter that identifies the default and summarizes any action the Purchaser has promised to perform and mail it, certified mail, return receipt requested.  (4) If the above steps do not produce the desired results, contact an attorney immediately.  Trying to cure a default by yourself can cause problems for you, the Seller. 

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Helpful Hint  

If legal action is required, a Seller has the right to initiate foreclosure proceedings.  Find an attorney with experience in the area of real estate foreclosure. 

Also, because your attorney may be required to appear in court, it is best to hire one who lives near the property in question.  This will save you from paying travel time and other unnecessary expenses.

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Helpful Hint 

Declaring a loan to be in default and starting the foreclosure process is a serious matter and should be handled by an attorney familiar with the laws of the state in which the property is located.  The biggest mistake made by Sellers in this area is (1) trying to take matters into their own hands, and (2) delaying the exercise of their rights.  Begin to think in terms of foreclosure when the Borrower is one month behind, not three or four months.

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Remember, you are not the “bad guy”…the Borrower is the one not making payments.  They can sell the property, refinance the property or bring payments current.  The ball is in their court, so to speak.  Explain the available options and tell the Borrower you are prepared to bring legal action.  After an initial phone call and a certified letter, only swift and decisive action taken with the assistance of legal counsel is likely to cause them to act.  Be honest, firm and considerate.  Don’t harass and don’t delay!  

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Helpful Hint 

Keep records of all written and spoken conversations with the Borrower, including dates, times, and what was discussed.  You’ll never know how or when these records will come in handy until you need them but don’t have them.  Then it’s too late!

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A failure to enforce any clause in your contract can, over time, establish the precedent that the clause is not binding and has no effect.  In other words, actions speak louder than words.  Consistent conduct over a period of time, in fact, can take precedence over the actual wording on your contract in a court of law!  In short, stick to the contract or be prepared to find it difficult to enforce in court.

The "Note Owners Manual" also covers topics such as the definition of a mortgage/trust deed, components of the typical mortgage/trust deed, proper record keeping, how to use an amortization schedule, handling property insurance and property taxes, and much more.  It is available through First Class Cash Flow Handlers ($29.95).   

Question:  Does your home sales strategy involve "no-money-down"?

Answer:  No.  You should never sell your home with no-money-down.

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Question:  Will your sales strategy work for other types of property?

Answer:  Yes.  You can sell a condo, town house, duplex, or apartments using this method.  In addition, it works well for commercial property.

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Question:  Does the strategy require lots of work?

Answer:  The strategy pretty much sells your home on its own.  The only work involved is getting your house ready to sell (i.e. cleaning and painting, etc).

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Question:  How soon will I see results?

Answer:  When you place an ad using the strategy, your phone will start ringing quickly.  We've seen people put a for-sale sign in their front yard and get instant results with the strategy.

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Question:  Do I have to do lot of silver' tongue dickering over sales price with buyers?

Answer:  No.  This strategy gives you the advantage of a seller's market.  Getting market value for your home is no problem.  Sometimes if your home needs repair, your price may need some adjustment.  Otherwise, market value can easily be obtained.

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Question:  Does the strategy involve a lease with an option to buy?

Answer:  No.  This strategy produces an outright cash sale.

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Question:  What if my home is in bad condition?  Will the strategy still work as quickly?

Answer:  Yes.  However, it's best to put your home in good condition.  You'll get a better price.  No matter what condition, location, or sales price, every home will always have a number of interested buyers.  This strategy will make your home stand out over similar homes to yours.  Why?  Buyers will realize its easier to buy your house over other similar homes when you use the strategy.

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Question:  Does the sales strategy involve bidding?

Answer:  No.  However, you could use a bidding method with the strategy if you want.

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Question:  Do I need a lawyer?

Answer:  Yes.  Line up a good real estate lawyer to help you close the sale.  Don't prepare sales documents on you own.  A good real estate attorney will protect you.    

If you are selling a home and considering offering owner financing, you need to know "How To Sell Your Home Fast In Good Or Bad Markets".  This manual will walk you through the process of preparing your home for sale, marketing your home, finding the proper buyer, successfully structuring the mortgage or trust deed, and selling the mortgage or trust deed for cash (if you elect to do so). 

How can First Class Cash Flow Handlers help me?  First Class Cash Flow Handlers can help you in several ways.  1).  If you are a holding a cash flow note, we will buy that note for cash.  We specialize in helping our clients solve their cash flow needs.  We can provide you with a lump sum of cash in exchange for any cash flow note.  2).  If you are selling your home, we can provide you with products and services which will allow you to sell your home quickly (using owner financing to attract buyers).  You may elect to keep the resulting cash flow note and collect monthly payments, or you may elect to sell the cash flow note and receive a lump sum of cash.  3).  If you are currently holding an owner financed mortgage or trust deed, we can provide you with educational materials to assist you in securing your investment in the mortgage or trust deed.

What is a cash flow note?  A cash flow note is a written document that states a promise to pay, and the terms of the promise, which include the amount, the interest rate and the length of time.  A cash flow note may be a mortgage, a trust deed, a deed of trust, a business note, a court award (such as a structured settlement), lottery winnings, annuities, etc.

What is owner financing?  Owner financing occurs when the seller of a property takes the place of a bank or mortgage lender and finances the buyer directly.  This results in an owner-financed mortgage or trust deed being created.  (These notes are also sometimes known as privately-held, owner carry-back, seller financed or owner take-back loans.  You may also hear the term creative financing applied to these types of transactions.  These terms all refer the same thing--a cash flow note held by a property seller and secured by the property that he/she sold.) 

Why should I consider offering owner financing if I'm selling a property?  There are many advantages to offering owner financing to sell your home.  You will be able to attract a larger number of interested buyers because there is no barrier to buying your home--a buyer does not have to qualify for a bank loan.  Most homes sell very quickly because once a qualified buyer is located, there is no need to wait for bank approval.  Closing can occur almost immediately, and closing costs are much lower than with a traditional bank loan.  By carrying-back a mortgage or trust deed, you can spread out the taxable gain over time, creating a major tax benefit.  Your mortgage or trust deed will provide you with a solid investment, secured by real estate and earning a respectable interest rate which may be as much as 4-5% more than you could earn on a money market savings account.  Your mortgage or trust deed is also a liquid asset which you can sell for cash at any time.     

If a bank or mortgage lender won't finance a buyer, why should I?  Lending requirements for loans offered through banks and mortgage lenders tend to be very rigid.  As a result, many qualified buyers find themselves ineligible for these loans.  These buyers often have good credit ratings and sizable down-payments, but may not qualify for a traditional loan because of a technicality, such as a recent divorce, relocation, job change, etc.  You will find many buyers that are able to afford your home and can put down a sizable down-payment even though they do not qualify for traditional lending solutions.  Because you will be acting as a lender, you have the right to request a credit report on any person interested in buying your home.  You will be able to judge very easily whether they are a candidate for purchasing your home by examining the credit report, and your loaning requirements do not have to be as strict as the bank or mortgage lender because you don't have to worry about federal guidelines, etc.   

I'd like to offer owner financing to help sell my home, but I need the money from the sale right away.  What can I do?  You can sell the resulting mortgage or trust deed at the same time you close on the sale of your home.  This is called a simultaneous closing.  You may elect to sell all or part of the mortgage or trust deed.  We will work with you to determine which of our many different plans will satisfy your needs.  Either way, you will receive a lump sum of cash at closing. 

What types of properties can be sold with owner financing?  Any type of property can be sold with owner financing.  In fact, many properties which are difficult or impossible to sell otherwise will sell easily with owner financing.  Single family homes, multi-family homes, town-houses, condominiums, commercial properties, land and businesses can all be sold using owner financing.  (*Please note:  Simultaneous closings may not be practical for commercial properties or business transactions.  However, you will be able to sell the note after you have received a few payments on it.)

Is this legal?  First Class Cash Flow Handlers does not condone any illegal activities.  Owner financing is completely legal in all states.  In fact, it is currently estimated that approximately 20% (one in five) of all real estate transactions involve owner financing.

Do I need a lawyer?  Yes, absolutely.  You should never attempt to sell real estate without the advice of a competent real estate attorney. 

Will I need a realtor to sell my home?  While hiring a real estate professional to help you sell your home does has some advantages, it is not required to work with a real estate agent or broker when you use owner financing.  You can use owner financing to sell your home with or without the aid of a real estate agent or broker.

I'm confused by some of terms used.  How can I find out what these words mean?  For your convenience, we have included a glossary on our website.

Where can I get more information about selling my cash flow note or using owner financing?  For additional information about selling a cash flow note, please see our "Noteholders" page or call us at (401)-258-7158.  For more information about using owner financing to sell your home, we recommend "How To Sell Your Home Fast In Good Or Bad Markets".  You'll also find resources designed to help you create, maintain and secure your mortgage or trust deed on our "Products" page. 

What does this mean to you, as a home seller?  Basically, it means that when you sell your home, you will create a loan, in the form of a mortgage or trust deed, that will allow the buyer to purchase your home from you.  Why would you want to do this?

• Offering owner financing will create more interest in your home and generate a larger number of qualified buyers.

• You will be able to sell your home more quickly because you will not need to wait for bank approval and closing can occur much more quickly.

• Closing costs are much lower.  There are no "junk fees" or points involved.

• You will be able to sell your home for its fair market value, because offering owner financing allows you to create a seller's market.

• You will likely be able to sell your home regardless of whether the current housing market is good or bad.

Once the mortgage or trust deed is created, you have several options open to you.  Because you have agreed to furnish the financing for your buyer, you have the right to collect payments on a monthly basis from your buyer, as specified in the mortgage or trust.  You may simply elect to collect each payment on a monthly basis and do nothing further.  The benefits to this option?

• You will collect a monthly payment which you are free to spend or invest as you like.  It's your money.

• You will receive a tax break because your capital gains are spread over time. 

• You will be the owner of an investment which is secured by real estate, giving you the option of foreclosing on the home and reselling it if the loan defaults.

• Your investment will earn a relatively good interest rate.  Interest rates on owner-financed mortgages and trust deeds are often higher than interest rates on more traditional savings solutions.

• You now own a liquid asset which can be sold to generate immediate cash if necessary.

Receiving a check every month for the 15 years or longer would be a nice thing for most of us.  However, the reality of the situation for most is that cash will be necessary immediately in order to purchase a new home or for other purposes.  So, can you use owner financing if you need to receive cash up-front for the sale of home, instead of monthly payments?  Yes, you can.  You can do so by selling the mortgage or trust deed you have created as soon as you close the sale on your home.  This is called a "simultaneous closing".  It is also sometimes referred to as "table funding". 

If you do elect to sell your mortgage or trust deed upon its creation, you have several "purchase options" available.

• You may choose to sell the entire mortgage or trust deed.  By doing so, you will receive a large lump sum of money, sometimes as much as 90% or more of the purchase price of your home, depending on the individual characteristics of the mortgage or trust deed.  You will no longer be involved with the mortgage or trust deed once the sale is complete, so if the buyer defaults at some point, you will not be affected at all.  This is called a "full purchase".

• You may choose to sell part of each individual payment and retain the rest.  By doing so, you will receive a large lump sum of cash and still receive monthly payments for the term of the note.  For instance, you might elect to sell 50% of each of each payment and keep the other 50% for yourself.  If you elect this option, you will still be involved with the mortgage or trust deed, because you are still collecting money from it periodically.  So if the buyer defaults at any point, you will be directly affected.  This is called a "partial purchase".

• You may choose to sell a certain number of payments and retain the rest of the payments.  This may work in one of two ways:  1.)  You may elect to sell the payments from the front end of the mortgage or trust deed.  In this case, you would sell perhaps 24 payments out of 120.  Once those 24 payments have been made, the payments will once again revert to you and you will collect the remaining 96 of them.  This is another form of "partial purchase"  2.)  You may elect to sell the payments from the back end of the mortgage or trust deed instead of the front.  In this case, if you sold 24 payments out of 120, you would receive the next 96 payments and the remaining 24 payments would be sent to the note buyer (the person who purchased the payments on your mortgage or trust deed).  This is called a "reverse partial purchase".  

• Combinations of these "purchase options" can be used as well.  For instance, if you have a mortgage or trust deed with a term of 120 months, you might elect to sell the first 24 payments outright and 1/2 of the following 24 payments.  In this case, you would receive nothing for the first 24 months (the payments would go to the note buyer).  After the first 24 months, you would receive 1/2 of the monthly payment for the following 24 months (with the other half going to the note buyer).  Once these 48 months have passed, the entire monthly payment would revert to you and you would collect the entire payment for the rest of the 120 month term.

• If you decide to utilize a "partial purchase" agreement of some type, you will often have the option of extending the purchase agreement if you find yourself in need of a more cash in the future.  For instance, using one of the scenarios above, if you have elected to sell the first 24 payments of a 120 payment mortgage or trust deed and you find that you need additional money about 8 months later, it will probably be possible for you to sell additional payments.  You might decide to sell another 48 payments and receive the cash for those payments immediately.  Please note, you do not have to wait until the initial 24 payments have been made to exercise this option.  You may choose to do so at any point in time.

To summarize, owner financing can enable you to sell your home quickly, at top dollar and still structure an "all-cash" sale of your home, if you desire it. 

If you are interested in pursuing this avenue, we can help you with our resource "How To Sell Your Home Fast In Good Or Bad Markets".  We will also buy your mortgage or trust deed from you when you are ready to sell.  For more information, visit our home page.