This is to Michael Morrongiello. I have a mobile home with 10 acres in Buna, Tx. that I am trying to sell to a man. He is having to go thru his credit union to do a land only finance. This means he has to come up with a lot of money himself. He is currently living in the home and paying me 1000.00 a month until he gets everything straight with the credit union (very picky). Want to know if you would be interested in buying the place. Appraised at 70k and selling for 50k. I still owe chase manhatten 54k but willing to take the loss. Been trying to sell this place for 8 months. This guy is the only one that is willing to pay anything. Please reply
Does a buyer you owner finance need to qualify if you plan on selling the note? I have someone interested for a house I am asking 115k for but she only makes about 30k a year. So, can I ask for 5% down with her and sell the note ?
Jerrold:
You can elect to sell your home to a prospective buyer that comes along and has some cash to put down and you feel good about and also carry the “paper”.
However if your true “end game” is to be able to SELL the seller financed “paper” and convert this back to a cash position and liquidity then as you stated, you must be more selective in WHO you put into the home, finance, and how the transaction is structured.
The devil details will surround but not be limited to the following areas or issues:
cash down payment from buyer
use of occupancy (owner vs non owner)
type of property (house, duplex, condo,etc.)
employment of the prospective buyer
stability of the buyer
overall buyers credit profile
prospective buyers credit scores
is this a home that is being quickly flipped or has had a large run up in its value
Do you wish to sell the Note concurrently with the property sale closing or can you “age” or season the Note and collect some payments
What is the income situation for the buyer
What is the condition and upkeep of the property
What will be the anticipated repayment terms for the seller financing
Hope some of the above helps you shift your mindset some so that you understand what variables a Note funder (Like ourselves at Sunvest) are looking for …
Now, if you are OK with holding the “paper” then many of the above issues may be irrelevant.
Re: Owner Finance and selling the Note - Posted by KeithK2
Posted by KeithK2 on September 09, 2002 at 12:36:56:
Hi Jerrold!
I’ve been told that you can sell anything if the price is right. The problem comes up when the sale price doesn’t allow the seller to make a profit!
Putting an unqualified purchaser into a note will undoubtably result in a lower offer for your note. Anything negative about a payor’s credit or quals has a negative impact on the salability of the note.
Putting someone who is obviously unable to afford the house into a note deal can result in you or your note buyer getting involved in a charge of “predatory lending” which always costs you money no matter whether you win or lose in court.
Keep in mind that a note buyer always checks out the credit of a payor and makes their offer accordingly.
Re: The Devil is always in the details… - Posted by ChrisS
Posted by ChrisS on September 10, 2002 at 19:49:32:
I’m trying to build a working relationship with with realtors…helping them close more deals by having their sellers carry back the note. Are you, as a note buyer, expecting the seller to hold the note for awhile before you consider buying it? Or are you informing the realtor that they need to be sure that the buyer has rock solid credit so that the seller’s note will be purchased without seasoning?
Thats what I thought. I got a suggestion about owner financing and selling the note in closing but as I thought through the process there seem to be something I wasn’t considering like the buyers qualifications.
It was a good suggestion but the devil is always in the details.
Chris:
Many Note investment firms will NOT purchase a newly created seller financed Mortgage & Note concurrently or simultaneoulsy with the the property seller selling his / her property. They often wish to see several months or longer of an established payment history or “seasoning” on the Note instrument itself BEFORE they will fund its purchase…
We (Sunvest) have NO issue with this at all. We regularly fund the purchase of new unseasoned private seller financed Mortgage Notes concurrently with the property seller selling their property and taking back the Note instrument.
Clearly IF we are going to purchase an unproven Note with no existing track record or payment history associated with it, we will need to pay more attention to the payor credit, employment, income & debt issues, etc. - however we do not required “rock solid” credit to purchase a new seller financed Note.
Generally credit scores in the 575 range or greater, preferably 600 or greater will allow for great flexibility in how the sale of the property transacion and the sale of the seller financed Mortgage Note transaction can be structured. When we start dipping below that 575 credit score threshold, we then tend to also want to see some history of perfomance or an established payment history. However there are exceptions to every rule…
We recently purchased a new unseasoned 1st lien Mortgage Note on an owner occupied residential property where the buyer had credit scores under 550. However he was in this case putting down almost 30% of the purchase price of the property. So this significant down payment allowed us some flexibilty to still get comfortable with such a credit profile customer, even with an unseasoned newly created Mortgage Note.
So if I find a person selling their own property and willing to create their own financing, do you folks work with them on creating a Note as well?
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Thanks
N
Neil:
A property seller that is selling their property and carrying back a seller financed Mortgage & Note is essentially doing just that; Creating their own financing to assist in the sale of the property and opening up the potential pool of buyers that are out there in the marketplace for their property.
We works closely with buyers, sellers, investors, Realtors, etc. to assist these folks in structuring the Seller financing (“paper”) if it is also the intent of the property seller to want to liquidate their “paper” and obtain cash.
Chris:
We will only look at mobile home Notes where there is also Real Estate involved. We DO NOT purchase “chattel” liens or personal property liens solely against a mobile home itself.
The home must be properly set up on a land parcel with various improvements that exist.(Well or public water, sewer, or septic, electric, tied downs, wheels, tow tongue, and axles, removed, etc.)