Who wants to wait for the monthly note payments to trickle in over the next 5, 15, or 30 years? It makes sense that more sellers would be willing to carry back owner financing for the buyer if they knew how to sell all or part of their note for cash shortly after closing.
When a property is sold with owner financing and the newly created note assigned to a note investor at closing, it is often called a simultaneous closing. The property is sold, the note created, and then the note sold, all at the same time or simultaneously. A simultaneous closing is a relatively safe route for the seller as they can be certain of their note’s value with the cash proceeds from the note sale deposited by the investor at closing.
However, the majority of investors prefer a bit of seasoning. Seasoning allows for some time to pass between the creation of the note and the subsequent assignment or note purchase. Rather than purchasing a note simultaneously with its creation, they want the seller to temporarily finance the transaction.
The amount of time or seasoning required can vary from 72 hours to 60 days or more depending on the investor. The upside to the seller holding the note and collecting payments is that the number of potential investors and the note purchase price will generally increase. The downside is the seller has to wait for the cash and does not have a 100% guarantee of how much a note buyer will invest during this waiting period.
For more tricks, trades, and secrets of creating marketable notes that can be sold for top dollar through temporary seller financing check out the bookstore for Personal Profit Series: Notes – Your Complete Money Making System to Buying, Referring, Creating and Holding Real Estate Notes!