What is Simultaneous
Closing?
It’s a seller
financing technique whereby the property seller offers
to create a private mortgage note with the buyer and
then turns around and sells it to a note investor on
closing day.
In a conventional Real
Estate sale, closing day is the day when the
documents are executed and/or recorded, and the real
estate sale (and loan) is completed.
In a Simultaneous
Closing transaction, there is a second closing in
which the seller financed note is sold to a note
investor.
This second closing
could take place on the same day as the Real Estate
transaction closing, or it could take place shortly
after.
Seller financing can
be of benefit to property sellers
Some property sellers
are willing to offer seller financing to generate
more interest in the property. They know that there
are people out there that don’t qualify for
conventional mortgages, and the sellers are willing
to offer their own financing and act as a
bank to the buyers.
They know that
offering seller financing will bring in more
interested buyers and that as a result they will be
able to sell properties quicker and more profitably.
Why don’t all property
sellers offer seller financing?
First, the seller has
to be willing to receive monthly payments instead of
a lump sum. If the seller is in search of monthly
cash flow, this is a great long-term investment, but
not everybody is looking for this.
Then, there is the
risk of default. Buyers could stop making monthly
payments and the seller may have to foreclose. This
will cause the seller to spend time and money
dealing with attorneys, eviction issues, etc. This
is a bigger headache than some people want to deal
with.
Some sellers don’t
have enough equity in the property to be able to
offer this, while others are not aware that they can
offer seller financing even if they don’t own the
property outright and are still making mortgage
payments to the bank.
Simultaneous Closing
goes a step further
You already learned in
the above paragraph that seller financing by itself
has a downside. Here is where a Simultaneous Closing
can be of great benefit.
By selling the seller
financed note for cash on closing day, there is no
need to receive monthly payments over a long period
of time.
And if the buyer later
defaults in his payments, it’s not the seller’s
problem anymore. The seller got his money and is out
of the picture.
The third point is a
little more difficult to make because we haven’t
discussed what a
wrap-around mortgage is (see
the definition in the FAQ page), but let’s just say that with
simultaneous closing, the seller may be able to
create a wrap-around mortgage and sell it at closing,
even if he’s still making mortgage payments.
Who benefits the most
from a Simultaneous Closing?
Investors/Rehabbers
that need to close a property sale quickly in order
to move on to the next project are the ones that can
benefit the most. These investors are used to
dealing with buyers, attorneys, title agencies, etc.
and have the time to devote to any issues that may
arise. They are prime candidates for using this
technique.
Homeowners can also
benefit from this, but they cannot be the typical
hands-off homeowner. They have to be willing to
screen potential buyers, set and negotiate the sale
price and terms of the mortgage, deal with the title
agency, note buyer, etc. In sum, they have to be the
hands-on type, and have time on their hands to do all
this.
Loan Originators that
are having problems getting their buyer’s approved
through the system due to bad credit and that have
time constraints are also candidates.
Realtors representing
sellers that have time constraints and are having
problems generating interest in their properties can
benefit also.
Any other parties that
represent sellers that need to sell properties
quickly and are having problems finding buyers, such
as attorneys, accountants, title agencies, etc., can
provide a valuable service to their clients by using
this technique.
How do I know if this
is for me?
Ask yourself the
following questions
-
Do I need to sell
my property quickly or can I wait the time it
would
take to sell through conventional channels?
-
Am I having
problems selling my property?
-
Do I want to sell
it at full appraised value?
-
Is my property non
conforming? (i.e. dimensions, looks, local
zoning, etc)
-
Am I willing to
spend time dealing with all parties involved,
buyers, attorney, title agency, etc. ?
You may want to
consider offering Simultaneous Closings if you
answer Yes to most of these questions.
What is the next step?
Feel free to browse
this website and become familiar with its contents
before deciding whether this is what you want. The
Seller Financing
page has an example of this type of transaction and
describes the steps that we go through to close a
Simultaneous Closing deal. You may find interesting
articles on the subject in the
Articles page.
You can also register to receive our free
'Simultaneous Closing Report' and newsletter
here. This report describes in more detail the
steps of a simultaneous closing transaction.
If you already know what you want and would like to
obtain a quote for your Real Estate simultaneous closing deal,
you can get a quick quote by filling out our secure online
5
4
Quote Request Form. We’ll be happy to help.
If
you feel that you still need to get more
information, you may consider obtaining our
e-book
"Simultaneous Closings Revealed : How to sell your
property fast using seller financing and other
people's money".
This e-book has been written by insiders with
property sellers in mind and guides you step-by-step
through the process of profitably selling your note
to a note buyer in a Simultaneous Closing
transaction.
Simultaneous Closings Revealed:
If you are serious about
doing a simultaneous closing, you may consider getting our e-book
'Simultaneous Closings
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-
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-
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-
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-
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-
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-
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-
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-
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