Here are a few guidelines to consider…

How Do You Make Money When Owner Financing?

The whole concept behind seller financing is that you are acting like the bank. While that carries risk of receiving payment, you can also get a great return on your money.

I tend to recommend that if you are going to carry back a note, the face rate (interest rate) should start at 10%.

Many potential buyers will tell you that banks will lend to them much lower – well, if that is the case, then they can get the loan at the bank – it needs to be worth your while to carry back a note (financially speaking).

If someone wants a lower rate, look for a larger down payment. This also helps lower your risk of taking back the property due to non-payment.

For example, the minimum down payment I like to see is 10%. That would get you a note written at 10% interest.

If someone were willing to put down 20%-25% then I would consider creating the note at a rate or 9% or even 8%. – More equity equals a safer note.

Selling Your Owner Financed Note Later

In addition to getting a good return on your note, you may have the flexibility to sell the note at a later date if your financial circumstances change. How you create the note in the beginning can go a long way towards better pricing. Here is the short list of items to consider.

1. The bigger the down payment the better. Buyers are much less likely to walk away from a property with real equity.

2. The “discount” in selling your note is caused by several variables. One such variable is the difference between the face rate of the note and what the investor wants to earn. The higher your interest rates the better.

3. The shorter the term of the note the better – but not too short. A 15 to 20 year note is great. A seven-year note with a big balloon is not. There is too high of a risk the buyer won’t be able to refinance and the balloon will not be paid.

4.  Check out the credit history and income of the buyer. Find out upfront if the buyer can afford the monthly payments or  has troubles making any payments on time.

5. Have the monthly payments go through a third-party servicing center. This will provide a potential investor with a great payment history.

6.  Get the documents prepared by an attorney or licensed closing agent. You want to be sure that you have a secured lien against the property and keep in compliance with any legal issues.

Although every deal is different (property, buyers, area, etc), the above will give you a good place to start and help you make a good financial decision for you and your family.

For more information on owner financed notes you might want to check out:

10 Advantages to Using the Seller Carry Back

Disadvantages to Seller Financing

21 Insider Secrets You Must Know Before Selling a Mortgage Note

Here’s a look at each group including tips for finding and selecting the best note buyer.

Over the past 20 years we have both bought and sold thousands of cash flow notes.  We’ve found that most will fall into one of these…

4 Types of Note Buyers

#1 Institutional Investors

The institutional investor will purchase notes on a national basis with their own funds. They might hold for long investment or later securitize on the secondary market. These are the “big boys” of the industry with the ability to write the check at closing. They do not usually contact a broker or seller if a note fails to pay, unless there is concern over fraud and/or a first payment default.

#2 Private Investors

The private investor purchases notes on a smaller scale, usually limited to a certain geographic region. It is a bit harder to find private investors. Often they are cultivated through word of mouth or by networking with local investor groups. These might include doctors, lawyers, real estate investors, and/or self-directed retirement accounts.

Extreme caution is recommended when dealing with private investors. Special consideration must be given to:

• The fact that a private investor is more likely than an institutional investor to come knocking on your door due to a late or missed payment from the note payer.
• The sophistication level of the private investor. Are they truly equipped to underwrite, close, and service a note?
• Whether there is any implied or actual guarantee provided on the performance of the note.
• Compliance with all aspects of SEC, including restrictions on the solicitation of investors and the offering of unregistered securities.

A whole manual could be written on the Securities and Exchange Commission (SEC). Generally, you will be safe from violating the SEC rules if you avoid 1) soliciting investors through advertisement, 2) only sell one note to one investor, and 3) have the investor take ownership of the note and perform all due diligence for themselves. If you choose to play in this arena, please seek competent legal counsel.

#3 Mentor/Master Broker

Another option is to find a note buyer or broker that will act as a mentor. An experienced mentor should have at least seven years of active participation in the cash flow note business. This mentor is sometimes referred to as a master consultant or master broker. They usually buy some notes for their own account and help place others with institutional investment funds. The “master consultant” usually receives compensation through either an upfront mentorship fee or as some split or percentage of the transaction at closing.

#4 Posers

This group pretends to be investors – but they rarely (if ever) fund a deal themselves. This leads to a daisy chain of note brokers that can make it tough to get deals closed. Unfortunately, most of the online note listing services are overrun by people pretending to be investors. Either deal with the end-user or once removed through a master consultant. Any more hands in the pot will tend to spoil the price and effectiveness.

The first step to marketing a note for top dollar is to locate several reliable investors that are preferably end-users. There are several ways to locate an investor with varying degrees of success.

Being in the Internet age, many simply visit the Web and search for…

Note Buyers, Note Investors, Contract Buyers, Private Mortgages, Trust Deed Buyers,

or some combination thereof. Maybe that’s how you found us. Might I be frank? That is for rookies.

Now if you are a note buyer or note broker, using the Internet can be a great way to find notes for sale. However, it is NOT the best way to find investors to purchase those notes.  Why? Because without prior knowledge it is hard to know whether you are dealing with a reputable investor or a poser.

We’ve simplified your search by providing our personal Rolodex of investors in the Directory of Owner Financed Note Buyers and Service Providers. This valuable resource has been updated for 2012 and made available in our bookstore!

In an effort to sell fast and stand out from the crowd, sellers are turning to the owner financed installment sale. By accepting payments over time from the buyer, the seller provides an alternative to bank financing. This attracts more buyers and helps the owner get attention in a market flooded by oversupply from foreclosures.

Of course sellers don’t want to jump from the frying pan into the fire by trading a house that won’t sell for a buyer that won’t pay.

Here are 5 safety tips for sellers considering an owner carry contract:

Tip #1 – Review the Buyer’s Credit

How buyers have paid bills in the past is a good indicator of how timely they will make future payments. Always review the buyer’s credit prior to accepting a promise to pay. Sellers can obtain a signed authorization from the buyer to pull credit through a reporting agency, or the seller could simply ask the buyer to obtain a copy of his or her report for the seller’s review.

Tip #2 – Get a Down Payment

The more money a buyer puts down, the more “skin” they have in the deal. The greater this equity, the lower the likelihood the buyer will stop paying.

When people have little to no equity, they are more likely to default or just walk away from the home. Few sellers want the hassle of taking back a property through foreclosure, so increase the odds in your favor by requiring a down payment.

Tip #3 – Set the Terms

The terms include interest rate, payment amount, frequency, and the due date for payment in full. There are also late fees, default clauses, requirements for insurance, and other standard provisions.

While the terms can be whatever the buyer and seller agree upon, it makes sense to set terms that are affordable to the buyer AND favorable to a note investor. This way a seller is more likely to own a note that is valuable to an investor in case they ever want to sell future payments for cash.

Tip #4 – Get Help with the Documents

In addition to putting the terms in writing, the documents evidence the lien. The obligation to pay (or IOU) usually takes the form of a promissory note, which is secured by an owner mortgage or trust deed recorded in the county records. A land contract or real estate contract are also used in some states. A qualified attorney or title company familiar with local laws should prepare the closing documents.

Tip #5 – Collect Payments Like a Pro

Tracking the payments, interest, and balance is often referred to as servicing the note. In addition to collecting payments, a servicer should verify the real estate taxes and insurance are kept current. The seller can perform servicing but it is a whole lot easier to hire a third party company to handle this process.

If you are looking for the complete system for safe owner financing be sure to read our how-to manual. It includes documents, examples, terms, credit reading tips, note investor criteria, and lessons learned from 20 years of real life experience.

Here is what one satisfied reader said:

“Your product is one of my go-to programs. I am glad you took the time to put it together. I think I paid more than 10x when it first came out and I think it was worth every penny!”  Greg G – Canyon Capital

Available today in our bookstore as an instant download for just $99.97

Article written and copyrighted by Tracy Z. Rewey at www.NoteInvestor.com.

• Quick sale of the property
• Monthly income from the note
• No hassles of bank financing
• More qualified buyers
• Property that is hard to sell or finance

Rather than waiting 20-30 years for payments, many sellers opt to sell future payments to a Note Buyer. Here are the seven most common questions we receive on selling mortgage notes and trust deeds.

Why Would I Sell My Mortgage Note?

Circumstances change and many sellers would prefer cash today rather than small payments that trickle in each month. Here are just a few reasons people have sold their note for cash:

• Retirement
• Taxes
• Investment Opportunity
• Expensive Medical Care
• Vacation
• College Tuition
• Unexpected Financial Changes
• Peace of Mind – no more worrying if the buyer is going to miss payments or having to foreclose
• Accounting headaches, IRS regulations, paperwork hassles, and the list goes on…

What Is A Note Appraisal?

A note appraisal reflects the current market value of your payments similar to what a real estate appraisal provides for real property. Frequently referred to as a “quote” it shows what your future payments are worth to an investor in cash dollars today. We recommend having it evaluated once a year as pricing may change based on market conditions.

How Do I Maintain the Value of My Note?

Many of the items that affect the value were determined at the time the property was sold. However, keeping good records of the payments received and requiring the buyer to provide annual proof of current taxes and property insurance will help maintain the value of your important asset.

Can I Sell Just Part Of My Promissory Note?

Investors can purchase all or part of the remaining payments. Selling part of the payments allows you to receive a lump sum of cash up front, then payments when the note reverts back to you.

To minimize the discount, many people elect to sell just enough payments to meet their cash needs today and keep some of the future payments as an investment or nest egg. Always ask for an option that meets your needs.

How Is The Value Determined?

The value of a note is affected by the down payment, interest rate, payment amount, length of repayment, buyer’s credit rating, and payment history. The type, condition, and value of the property also impact the value of your note.

The time value of money, which makes payments due now more valuable than payments due in 20 to 30 years, is also factored into the offer. Due to inflation, money in your pocket today is generally worth more now than later. All of these elements will be taken into consideration in determining the current value of your note.

How Will Selling My Note Affect The Payer?

The payer or buyer experiences no change in the way the payments are structured. The only change will be the address where the payments are mailed.

How Do I Get Started?

The first step is to obtain a quote from a note buyer. The investor will ask some questions on the property sale and terms of the promissory note. This can usually be done over the phone or by completing an online worksheet. The investor may also request copies of the documents relating to your transaction, such as:

• Promissory Note
• Mortgage (or a Trust Deed, or Land Contract in some states)
• Closing statement
• Buyer information
• Pay history and current balance
• Previous title insurance policy
• Current hazard insurance policy

The investor will provide an offer subject to the standard title, appraisal, and buyer’s credit review. Once the review is finished and the documents gathered the transaction is reading for closing.  This process typically takes 2-4 weeks.  If preferred, an attorney or title company can handle the exchange of funds for the original closing documents.

Grab your copy of the Note Buyer List today!

Thanks for your interest in OwnerPropertyFinancing.com.

If you own your real estate outright, or if you have seller financing that can be wrapped around, carrying the contract when you sell your house may be the smartest financial move you could make. Investing in a contract on your own property will give you a far higher rate of return than you could possibly get by investing in a bank CD – and it’s far safer than investing in the stock market.

And, since you control the terms of the agreement, you can specify a payoff in 3, 5, 7, or 10 years – in case you believe you’ll want a lump sum of cash at that time.

Buyers want and need seller financing, but first they have to find you…

Studies show that more than 80% of all buyers begin their search on the Internet, but finding listings offering seller financing is like finding needles in a haystack. To make matters more difficult, when buyers approach real estate agents for help, many simply won’t take the time to do the research for them.

That’s a shame, because the number of buyers seeking owner financing is growing.

These buyers fall into two categories – consumers who have been rejected by banks because they don’t fit the new mold, and those who are simply fed up with high bank fees and questionable banking practices, so don’t want to deal with them.

They’re having a tough time locating homes and land available with owner financing…

And that’s why OwnerPropertyFinancing.com was created.

We know seller financing is a good thing, because we’ve used it both as buyers and as sellers. And we want others to have the same advantage. Our sole purpose is to connect buyers who want owner financing with sellers who want to offer it.

Save money while you find buyers…

Listing your house or property for sale on OwnerPropertyFinancing.com is inexpensive. Depending upon where you live, a few lines for a few days in the newspaper can cost anywhere from $40 to $100.

In contrast, your ad on OwnerPropertyFinancing.com – complete with up to 7 photographs, descriptions, and the terms you offer, will stay on our site for one full year for only $49.95. In addition, as a member you can list up to 9 more properties at no additional charge.

That’s only 14 cents per day for full, detailed exposure in the place where the majority of buyers are looking – compared to about $10 per day for a few words in a newspaper ad – where few buyers look these days.

But wait, to introduce our service to you, the first 100 property owners or sellers that respond to this invitation will get their first year’s subscription absolutely FREE, which is a savings of $49.95.

While we are already generating good traffic, we’re also working hard to set up network relationships and posting property listings on Google, Yahoo, and other sites. Our intent is to make OwnerPropertyFinancing.com the first place buyers look when they search for a home or property with seller financing.

In addition to your property listing, your membership gives you the option of searching for buyer members and communicating with them to promote your listing.

When you join us today, your property will be featured on our home page. So why not get started now? Just click here OwnerPropertyFinancing.com to register

Yours for successful selling,

Fernando Sanchez, Owner

P.S. Even if your home or land is listed with an agent, you’re welcome to join. Just be sure to follow any applicable State regulations about disclosing your agent’s name and agency affiliation.

This is a great idea that can really help connect people that want to buy or sell without banks.  Of course the success relies on active participants, which is the motivation for offering free membership to the first 100 sellers to list properties.  We wish Fernando and his team much success with this much needed service!

Homeowners die before they receive all of their equity under the Dodd-Frank Act.

The act requires any homeowner who sells their property using an installment sale, known as owner financing, to fully amortize the installment sale note. It does not allow any balloons to be negotiated between buyer and seller in the note. This means if you are 55 or older there is a good chance you will die before that 30 year note pays out.

Part of the purpose of the Dodd-Frank Act is to protect seniors who use or invest in financial products. The Federal government chastises insurance companies for the deplorable practice of selling seniors 30 year annuities because Ma and Pa will die before they receive their money. Yet, the Dodd-Frank act does the same thing when it mandates that you cannot receive all of your equity for 30 years. Just shortening the amortization period does not help either. How many buyers can afford the monthly payments on a ten or fifteen year amortization?

The Dodd-Frank Act strips homeowner’s of their equity

Part of the rationale for the act is to protect homeowners from having their equity stripped from them by unscrupulous lenders. Yet, the Act which mandates that an installment sale note be fully amortized over 30 years with no balloons does just that. Ma and Pa who use owner financing when they sell their property receive a note for their equity. They have the right and the ability to sell that note in the future. Anyone who purchases that note takes into consideration the time value of money. Just like bonds these notes are sold at a discount. The longer it takes for the note to pay out, the more of a discount the note holder has to take. So, if Ma and Pa need to sell that note in the future they are going to have to sell at a 30-35% discount as opposed to a 5-10% discount if it had a balloon. So, you can see that by the government mandating no balloons they have potentially stripped Ma and Pa’s equity by 20-30%. I can see the reason behind not allowing these installment sale notes to negatively amortize or to be interest only, but I don’t think allowing a balloon in 8 to 10 years is unreasonable or predatory. That gives the new buyer ample time to refinance or sell the property before the note becomes due. It is not reasonable to require Ma and Pa to wait 30 years to receive their equity, unless that is what they wish to do.

An Installment Sale is Not a Loan

Thirteen states have exempted owner financing to some degree from their Mortgage Loan Originator Act in 2009. They did this because they realize owner financing is not a loan; it is an installment sale. There is no third party lender; no points or origination fees are charged. In spite of this, Congress included owner financing in the Dodd-Frank Bill with additional regulations. Owner financing is not predatory. The seller has 100% skin in the game. Ma and Pa simply want to receive their equity over time with a reasonable interest rate. They don’t want to receive cash. They don’t want to invest in 1% CDs or in a stock market that lost 40% of its value in recent history. The sellers do not want the property back; they simply want a decent return on their money. That’s why they sold it in the first place. Today’s buyer using owner financing will most likely be tomorrow’s seller using owner financing.

The IRS does not recognize the installment sale as a loan. They view it more as a trade. The property owner is trading the property for a note, which represents the seller’s equity. The IRS only taxes the seller as they receive payments.

Yet, Ma and Pa who might have only one property which they want to sell using the installment sale method are penalized, scrutinized and regulated.

Over-criminalization

This act regulates the sale of your personal residence, your cabin in the mountains, the vacant lot next door, a rental house, a duplex, triplex and four-plex. How many of the millions of property owners are going to know that if they use owner financing they are going to have to fully amortize the note, verify and document that the buyer can qualify, and that the interest rate is supposed to be fixed for the first five years? If they sell their property and don’t comply with these restrictions, they could be fined up to $25,000 and a possible felony charge simply because they did not know of the restrictions and requirements. The 13 states which exempted owner financing realized it would be a regulatory nightmare trying to keep track of every residential transaction that property owners enter into, not to mention the cost associated with that regulation. 99% of the people who use owner financing do not make a business of selling their property using the installment sale method. It is most likely they would only sell property using on installment sale a few times during their life. But that one time might involve trying to sell four properties at the same time.

Each state has its own version of owner financing; some states use notes and mortgages, some use deeds of trust or contract for deed. Each state already has case law and state statues that set the standards for owner financing and provide the protections for buyer and seller. The Dodd-Frank Act simply adds another, conflicting layer of complexity to the simple act of selling your private property on an installment sale. The states should remain in control of owner financing.

Trying to apply the same rules and regulations and licensing requirements for banks and professional mortgage loan originators to Ma and Pa on Main Street is counterproductive. It is only going to drive owner financing underground. Buyers and sellers will still use it, but they won’t use realtors or title companies which creates opportunity for abuse where there wasn’t any before.

Is your credit good enough to sell your home?

The Act does allow a balloon in the installment sale note if Ma and Pa become mortgage loan originators. The Dodd-Frank Act restricts you to only three real estate transactions in a 12 month period where you offer owner financing terms. If you want a balloon or you want to sell a 4th property within a 12 month period using the installment sale you have to become a mortgage loan originator, which means: you have to have good credit, put up a surety bond, take 20 hours of classes on Federal and State mortgage laws, pass a national test, and take continuing education courses. 30% of mortgage brokers were unable to become mortgage loan originators because they either had poor credit or were unable to pass the test. Ma and Pa are sure to experience the same thing. Requiring a seller to take a test and have a certain credit score to transfer their private property is a slippery slope. It is an erosion of our private property rights.

This act, which is over 2000 pages and requires over 500 new rules to be written by 40 different agencies by July 2011, was meant to regulate Wall Street and protect consumers from the predatory lending practices of mortgage brokers, but has over-reached into Main Street and into the lives of Ma and Pa. Selling your own property using the installment sale method did not create the financial crisis. Including it in the Dodd-Frank Wall Street Reform and Consumer Protection Act is inappropriate. An installment sale is not a loan. This act is a limitation of the rights of property owners which will be virtually impossible to regulate. We need to ask our congressional representatives to exempt all owner-financing and return it’s regulation to the states or at the very least, to remove the draconian restrictions, in the Dodd-Frank Act.

The Act is just the framework. The Consumer Financial Protection Bureau has the authority to relax or expand the rules and regulations in the bill. They are in the process of reviewing the rules and regulations that do not go into effect until July 2011. Until then, it is my understanding that everyone will be following the laws of their state, but that could change come July 2011. Please write your congressional representatives, write your local board of realtors, and the National Association of Realtors or anyone else that might get the word out for Ma and Pa.

For the complete list of e-mail addresses and fax numbers for the US Congress and Governors go to http://www.conservativeusa.org/mega-cong.htm

To find your local board of realtors go to:

http://www.realtor.org/directories

To contact the National Association of Realtors:

Anthony Hutchinson

Sr. Policy Representative – Financial Services

National Association of REALTORS®

Phone: (202) 383-1120 or Email: THutchinson@realtors.org

Sam Whitfield

National Association of REALTORS

500 New Jersey Ave. NW, Washington, DC 20001

Phone: 202/383-1131 (direct) or E-mail: SWhitfield@realtors.org

About the Author: This informative article was written by long time note professional Rich Thom. For further information contact: Ric Thom, President of Security Escrow Corporation, Albuquerque, NM, Phone: (505) 266-3487, Email: ricthom51@yahoo.com, Web: http://www.securityescrow.com/about/

But circumstances change and many sellers would prefer a lump sum of cash today rather than monthly payments that trickle in over the next 10, 20, or 30 years.

If you are receiving payments on a mortgage, trust deed, or contract there are investors eager to purchase all or part of the future payments. Note buyers run ads and mail postcards leading many to wonder,

“Should I sell my mortgage note?”

Here’s a look at the top 5 reasons people sell mortgage notes:

1. Pay Bills

Reduce debt or pay expenses including medical bills, college tuition, credit card balances, and home repairs. Pay down a home loan or payoff an existing mortgage on the property sold.

2. Peace of Mind

Eliminate the hassles of paperwork, payment collections, and IRS reporting. No more monthly worries wondering if the buyer will:

• Make payments on time
• Take care of the property
• Pay taxes and insurance
• File bankruptcy, or
• Go into foreclosure

3. Make an Investment

Start a new business, fund an IRA or retirement account, buy another piece of real estate, or make a profitable investment.

4. Settle an Estate, Divorce, or Partnership

Distribute partial ownerships or settle disputes for notes involved with an estate, probate, dissolution of marriage, bankruptcy, partnership, or other entity.

5. Enjoy Life

Take a dream vacation, fulfill a passion, enjoy retirement or buy a new car, boat or RV.

Know Your Options When Selling Mortgage Notes

You don’t have to sell the entire cash flow. Depending on the goals, selling just a portion of the payments might be a preferred choice.

Investors are willing to purchase a certain amount of each payment (say $500 per month out of a $1,000 payment) or just some of the payments (say the next 5 years out of the remaining 30).

Known as a partial purchase, this provides access to some of the cash now with interest and payments still accumulating for future use. It also helps minimize the discount since the payments due sooner are worth more to an investor.

Selling a note is not the right answer for everyone. There’s a potential loss of interest income and tax benefits. Some high-risk notes just won’t be marketable for a price that makes sense.

However, it pays to know your options. Most investors are willing to provide a no cost no obligation quote for review with a CPA or attorney to help find the best solution for your personal situation.

Wondering how to reduce the discount and sell your mortgage or trust deed for top dollar pricing?  Be sure to grab your copy of 21 Insider Secrets You Must Know Before Selling an Owner Financed Note, provided as a free bonus with any purchase of the Note Buyers Directory.

Keeping accurate records will show how much the buyer still owes along with their payment habits.  Plus, it improves the value of the note to investors. 

Here’s a look at two ways to tackle payment histories.

Let a Pro Handle It!

Having the buyer mail monthly payments to a third party professional is the easiest option. This outside servicing agent keeps track of the balance and sends the money along to the seller.  They also issue the annual 1098 Mortgage Interest Statements and can hold original documents (like the Note, Trust Deed, or Mortage) in safe keeping.

The DIY Method

Some sellers use the “Do It Yourself”’ method having the buyer mail payments directly to them.  If sellers don’t use a third party for servicing they will need to follow these steps.

1. Place original note and other original documents in a safe deposit box.
2. Make a copy of each check or money ordered received (accepting cash does not leave a paper trail for note buyers to to verify).
3. Keep a copy of the bank deposit slip or monthly statement reflecting the single payment deposit
4. Create a ledger reflecting the date and amount of payments received
5. Calculate the amount applied to interest, principal, late fees (if any), and the resulting principal balance.  An amortization schedule or calculator can be helpful. Once calculated, record in the ledger.
6. Send out an annual statement to the buyer or payer along with the IRS1098 Mortgage Interest Statement.
7. Verify the real estate taxes and property insurance are being kept current.  Consider establishing a tax and insurance escrow wherein the buyer pays 1/12th of the annual amount into a reserve account each month.
8. Send collection letters as necessary for late payments.

Making Note Buyers Happy

When a note investor agrees to buy mortgage notes they will request a payment history.   A verifiable payment history can improve the value of a note as it provides proof of timely payments.  A payment history is considered verified when it is either provided by a third party or is backed up by the documents and records outlined.

Unfortunately many sellers fail to keep track of the payments received.  When they go to sell the real estate note they try to recreate the history from memory.  Without any proof of payments received, an investor has to go on faith.   Sometimes a payment history affidavit can substitute for a payment record but it still doesn’t add the value of a verifiable proof.

Note brokers can help sellers protect the value of their cash flow note by setting up a verifiable payment tracking method today!

Wishing for a lump sum of cash today?

If you sold property with seller financing chances are you’ve wondered about selling the real estate note. Here’s how to sell a mortgage note, trust deed, or contract in 7 easy steps.

Step #1 – Request Quote

Just complete a short informational worksheet to receive a free no obligation quote. This can be submitted online, by fax, or over the phone.

Click Here for a List of Note Buyers

Click Here to Download a Worksheet (PDF)

Step #2 – Provide Document Copies

To get started note buyers like to see copies of these three documents:

• Settlement Statement
• Promissory Note
• Mortgage, Trust Deed, or Contract

It is also a good time to be sure you know where the originals are located, especially the Promissory Note, as they will be requested at closing.

Step #3 – Accept Offer & Agreement

Once an offer is accepted it will be outlined in a written agreement. In addition to stating the price, the agreement will specify conditions of closing and who pays costs.

Step #4 – Note Buyer Review

The mortgage note buyer will perform a detailed review of the transaction, known as due diligence. This includes a review of the buyer’s credit, current tax and insurance status, payer interview, and other important items. They may also request copies of additional documents including a payment history, insurance policy, and existing title report.

Step #5 – Appraisal

The note investor will order an evaluation of the current property value. This usually takes the form of a BPO or drive-by appraisal. The investor wants to be sure the property value is still equal to or greater than the sales price. If the value comes in low, the note investor may present a revised offer for consideration.

Step #6 – Title Search

The title search verifies ownership of the property and the mortgage note. It saves time and money to work with any title report that might exist from the original sale date. If the title search shows money is still owed on a prior mortgage it will usually be paid from proceeds.

Step #7 – Closing

When all steps are complete the note buyer will send the final closing documents for signature. The title company is often used to handle the exchange of money for the original note and transfer documents. Funds are typically paid in the form of a wire transfer or cashier’s check. You are also encouraged to have your attorney review and advise with the closing process.

Selling your mortgage note can be a simple process when you work with an experienced note buyer. Just take a few minutes upfront to gather your information and documents and they will handle the rest for you!

Sometimes it is not only what you know, but who you know.

Knowing the right people can not only make things easier, in the case of the 2010 Directory of Owner Financed Note Buyers, it could also make you more money!

Gain access to our personal Rolodex of experienced note professionals that took years to develop.  Work direct with knowledgeable investors, educators, and master note brokers.

Discover why this bad mortgage crisis increases demand for seller financing and opportunity in the cash flow note business.

The Crisis

You can’t pick up a newspaper or watch the news without hearing about the increase in foreclosures. Last year 1 in every 45 homes in the U.S. received a foreclosure filing.

And the trend isn’t over yet. The first quarter of 2010 saw a 7 percent increase from the last quarter of 2009. (Source: Press Release from RealtyTrac.com)

The Challenge

Foreclosures are tough all around. They decrease property values, tighten lending requirements, and devastate the lives of displaced families.

So what happens when all these homeowners try to put the pieces of their lives back together and purchase another home?

Foreclosures stay on a credit report for up to seven years. A foreclosure in this market means a substantial loss to the bank, so they are unlikely to grant a new home mortgage loan anytime soon.

The Solution

When banks say “No” to a bad credit mortgage many buyers turn to owner financing. The seller agrees to “be the bank” and accept payments over time from the buyer.

This creative financing solution helps buyers with bad credit purchase a home. It also gives them a chance to rebuild their credit over time so they can once again qualify for traditional bank financing.

The Opportunity

Private mortgage notes are a staple of the cash flow business. As this segment of the market increases so does the demand for consultants and note brokers. Many sellers are looking for help on:

• Attracting Buyers in a Tight Real Estate Market
• Selling a Property Fast
• Structuring Notes for Top Dollar Pricing
• Selling Mortgage, Land Contract, or Trust Deed Payments for Cash Now

These are all areas a cash flow consultant can assist sellers in finding help from qualified real estate professionals and note investors.

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