Posted by JohnBoy on October 12, 2000 at 15:22:34:
You said you would advertise “as is”. Does the house need work done to it? What would it appraise at today in it’s current condition?
LET THE GAMES BEGIN!!! - Posted by Shenesa
Posted by Shenesa on October 12, 2000 at 10:09:32:
This weekend I am placing an ad in the paper on a house I want to flip. The ad reads “AS IS, NO BANKS, OWNER WILL FINANCE” 4br, 21/2 ba, Ctr. Hall Col. 112k -*.
I would like to sell the note at closing. Any suggestions on how to set this up. I will call a local note buyer to see if he is interested in buying the note and what is his discount %.
Thanks,
Shenesa,NY
Why not just discount it yourself… - Posted by SueC
Posted by SueC on October 13, 2000 at 07:21:42:
…and do a double close? If your note will be discounted 10% or whatever, why not just lower your sale price that much and flip at the closing table?
Also, in my experience, as Joe said, if you haven’t talked with the note buyers first, you will need to find out how much they’ll discount, what kind of credit they’re looking for in the buyer, etc.
Before you play the game . . . - Posted by JoeKaiser
Posted by JoeKaiser on October 12, 2000 at 21:31:59:
. . . it’s always a good idea to know the ground rules, who the players are, where the pitfalls are located, etc.
At the very least, you need to know who the note buyers are, which ones are real, and specifically, what they are looking for in a note purchase/sale. Then you tailor your terms to best match their specifications.
However, I think this should be your very last alternative to get a property sold and get paid. Heck, just discount the darn thing for cash and you’re likely to come out pretty much the same . . . with a whole lot less hoops to jump through. Still, you haven’t really experienced frustration until you’ve tried to get one of these carryback/sell the note deals done, so you might as well get it out of your system now.
Joe
Re: LET THE GAMES BEGIN!!! - Posted by ken in sc
Posted by ken in sc on October 12, 2000 at 14:35:51:
Why not ls/op? Could you sell with the same ad, but on a ls/op with them fixing up thehouse. Many lenders will loan on APPRAISED value after the tenant buyers have been in for a year. If the comps are indeed higher as you say, then when the year is up and the value is higher with the repairs, they can get a loan even with fair credit due to the equity in the house based on the new appraisal.
What I mean is if the house is worth 125k after the repairs and they only owe you 110k, then that is an 88% LTV loan. That is not a hard loan to get.
Going this route you don’t have to give up the discount to the note buyer. You do have to wait a year for your money and find someone who can do the work - but it might be worth it if your financing is in place. Run the numbers and see.
Just an idea. No matter what it looks like a good one.
Re: LET THE GAMES BEGIN!!! - Posted by Stacy (AZ)
Posted by Stacy (AZ) on October 12, 2000 at 11:45:21:
Good luck on this. You should get some calls. A couple of suggestions. First, I don’t think the AS IS belongs in your ad. You can tell the callers it’s “as is”, along with all the other things they’ll ask about.
Also, I forget, is this a fixer? If so, I get A LOT of calls if I mention this in the ad. You could say “NO BANKS, OWNER WILL FINANCE, Fixer, 4br, 21/2 ba”, etc., or you could start the ad with a phrase I learned from Steph (TX) that gets me a great response “FIX ME UP, I Don’t Need Much!”
About the buyers you’ll get: there needs to be a way to filter-out the buyers who are just dreaming, and those that could really qualify. You probably should already be setting-up with a note-buyer or two to forward credit applications to them so they can determine who they’d consider a good risk for buying your note. Get their credit app forwarded to you, or at least ask them what they need to know about a potential borrower before buying the note. No need wasting time on buyers that are not credit worthy in the eyes of a note buyer.
Just my .02, Shenesa. Otherwise, everything sounds good.
Stacy
P.S. By the way…don’t be so focussed on selling a note that you overlook someone willing to pay 1) all cash, or 2) an assignment fee for your contract.
Re: LET THE GAMES BEGIN!!! - Posted by SCook85
Posted by SCook85 on October 12, 2000 at 11:41:16:
Shenesa,
The ideal note will have a buyer who is putting at least 10% down, a buyer with good credit, an interest rate of somewhere around 12%, a good home that appraises for the sales price, and a note that is 80% of the sales price.
If you were able to meet all of that criteria then you won’t have any problems at all, however the reason people seek owner financing is because they are lacking in certain areas. They may not have down payment, or good credit. As soon as you don’t meet one of the criterias that I listed your deal becomes scrutinized much more and you are asked to do more, to produce more documentation etc…
Credit will be the most important of all the factors, so if you have to sacrifice in any area, try not to do it there.
I hope this helps.
Steve
Re: LET THE GAMES BEGIN!!! - Posted by Laure
Posted by Laure on October 12, 2000 at 23:53:50:
I haven’t been able to find a lender to treat a L/O as a re-fi. Got any suggestions?
Laure 
Re: LET THE GAMES BEGIN!!! - Posted by Shenesa
Posted by Shenesa on October 12, 2000 at 14:41:57:
I did consider doing a l/o but my seller needs his money for his parents retirement home.
Thanks for the response.
Shenesa,NY
Re: LET THE GAMES BEGIN!!! - Posted by Shenesa
Posted by Shenesa on October 12, 2000 at 11:54:59:
Thanks Stac, I love reading your post. I will make those calls.
Thanks,
Shenesa
Re: LET THE GAMES BEGIN!!! - Posted by Shenesa
Posted by Shenesa on October 12, 2000 at 11:52:16:
Thanks Steve for your response. I have a question in which I will play devils advocate. If buyer has good credit with 10% dwn pmt, why would he/she pay an interest rate of 12% when the interest rates with banks are around 8.34% now. I know that there is a lot of red tape with banks, but how do I make this attractive to the perspective buyers?
Thanks,
Shenesa
Re: brokers! - Posted by ken in sc
Posted by ken in sc on October 13, 2000 at 07:35:28:
Yes, see all the ads in your newspapers for loan brokers saying something like “borrow against your equity to pay off bills and credit cards”. These are b-c credit loan brokers. They have loans to sell from many sources. There is one in my town who has loans from over 100 different companies. There is one program which lets them treat it as a refi after six months!
Go see several and get to know them. Many are unscrupulous (sp) and will do anything, legal or illegal, to get a loan approved. Stay away from them. Some charge fees that are ridiculous. But you can find one that you like that can HELP your people.
Good luck.
Re: LET THE GAMES BEGIN!!! - Posted by JohnBoy
Posted by JohnBoy on October 12, 2000 at 12:29:26:
Exactly!
Why not just hook up with a good mortgage broker or a B, C, Lender that you can just get your buyer financed through?
With a B, C, Lender AND shaky credit you can them 80% financing with 5% - 10% down and carry the difference as a second mortgage yourself. Pretty much the same as selling a note. So why discount the note and take a loss against your profit when you don’t have too???
I mean, unless you have a note buyer that would buy a note against someone that couldn’t financed anywhere else, then WHY sell a note for a discount? Most, if not all, note buyers will want just as good of credit if not better to buy that note or they will expect to pay by you giving a large discount on it, so other than that, what’s the point?
Re: LET THE GAMES BEGIN!!! - Posted by Shenesa
Posted by Shenesa on October 12, 2000 at 14:20:34:
Thanks Johnboy for your response. Since I have a contract to purchase the house from my seller for 76k, comps 125-130k, I’m selling it for 112k. I would direct them to a broker who can finance 80% with a 20% dwn pmt. So if they put a 22,4k dwn which leaves 89,600k to be financed and they only qualify for 80k then I would go ahead and carry a 9600k + interest 2nd?