Why use a simultaneous closing?
If you ask someone when they are trying to sell their property if they would consider using owner financing to help sell the property they would give you two reasons why they would not want to do owner financing.  The first reason is that they do not want to be a bank and collect payments.  The second objection to using owner financing is that they need more than just the down payment.  Using a simultaneous closing would eliminate both of these objections. 

How it works?
To structure the deal three key elements of information need to be known.  How much the seller needs to walk with from the deal?  Secondly the fair market value of the property. And thirdly a good description of the property. A seller is trying to sell their property for $100,000 but can not sell it for some reason.  The fair market value of the property is $115,000 using a simultaneous closing the deal would be structured as follows: 

Sale Price      $115,000
Down Pmt       $11,500
1st Mortgage $103,500  

30 year term, 9% , monthly pmt $832.78, 7 yr balloon = $96,918.39

The funding source offers $93,000 for the note.  We can get the broker a fee and also give the seller exactly what they said they needed out of the deal. 

Funding source offer   $93,000     $104,500

+ Down Payment       $11,500     $100,000 what the seller needed 

                             $104,500        $4,500  broker fee 

Funding source offer $93,000  seller gets two checks:

Consultant fee              - $4,500

check #1  $11,500 down pmt.

Net for the note             $88,500
check #2   $88,500 net for the note 

                                 $100,000 total seller receives     

The actual purchase of the note would occur two or three days after the sale of the property.  In those two to three days the funding source is verifying all of the specifics of the closing and sale of the property.   Once the closing has been verified the funding source will either wire the money to the seller or send them a check for the note.  The simultaneous closing process can work with either a residential or commercial property.

Advantages
A realtor loses several sales a year because the buyer can not qualify.  Using owner financing the qualifying parameters are more flexible than conventional financing.  Someone could qualify to buy the property that might not qualify using conventional financing resulting in a sale for the realtor.  It will be easier for someone to sell their property because the qualifying criteria is easier for the buyer to qualify. 

The closing costs using owner financing will be considerably less than using conventional financing.  The only true costs are a credit check, appraisal and title work.  There will be some other minor costs such as documentary stamps.  On a percentage basis the closing cost are considerably less.  There are never any points charged whether it is a residential or commercial property.

Legalities
As a certified cash flow specialist you can not talk to both the seller and the buyer to structure a simultaneous close unless you have a realtor and or a mortgage lender license.  You can however talk to either the seller or the buyer and show them how a simultaneous closing would work.  The end result will be the same: an easier way for the seller to sell their property and an easier way for a buyer to get into a property.

 

 

Crown Capital Funding

A Reliable Source To A Financial Paradise