Seller-Financed Mortgage Notes – What is it and How Does it Benefit the Seller and Home Buyer?

In today’s real estate market, its becoming increasingly harder for home owners to sell their property for top dollar in the least amount of time. While many properties are going into foreclosure, there are thousands of homes just lingering on the market whose owners have paid their mortgage on time. These owners are using the traditional method of trying to sell their home, which is engaging the services of a real estate agent. This is includes pictures of your home in the paper and/or on the internet, holding open houses, etc. Although utilizing a real estate agent’s assistance is the norm, the problem is that the marketing done on your home most likely will appeal to qualified buyers with good credit. This narrows the pool of prospective buyers coming to view your property because during these economic times, many thousands of buyers have come into financial trouble, thus hurting their credit scores.

So, how can sellers widen the pool of prospective buyers? In other words, how can a seller market his property so that it appeals to the widest audience? The answer is easy. The seller can offer something which is called “Seller or Owner Financing”. What this exactly means is that the seller would act like the bank and “loan'” the money to the buyer. This works out perfectly because the buyer would not have to obtain traditional financing by going through a bank, and the seller would receive top dollar for his house. Now, please understand that seller financing does not mean the seller is actually lending money to the buyer to purchase his home. A seller financed mortgage note is an IOU that is created by the attorney of the seller which lays out the conditions of the payment schedule that the buyer must adhere to.This would include the monthly payment amount, the duration of the loan, and the interest. After the transaction is completed, most sellers find themselves not wanting have the headache of managing the monthly collection of payments that are owed but would rather receive a lump sum of cash for their future cash flow payments. Many companies in the cash flow industry offer a service where they can provide a lump sum of cash at a discounted price.

Seller financing a sale of a home makes the buyer extremely happy because the buyer probably could not have bought the property without the financing and the seller has sold his property for the highest price within a short amount of time.

To reiterate, the great benefits of offering seller-financing on a sale of a home are the following:

1) A seller would be flooded with premium offers for the property

2) Eliminate much of the bargaining and haggling

3) Create mutually beneficial financing for the buyer and seller

4) Close the sale in less than a month

5) Customize the purchase to meet the needs of the seller and buyer.

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