Posted by Doug Pelton on February 09, 2002 at 12:22:04:
thanks David. The seller(70’s) and buyer are neighbors and buyer can’t do conventional right now. She appears to be wanted to ‘help’ this young couple via the 5%. Of course, I am a newbie, but the idea here(?) is to eventually offer to ‘buy’ the contract at a discount and then sell it to a note broker (?). Doug
Purchasing a contract - Posted by Doug Pelton
Posted by Doug Pelton on February 08, 2002 at 11:47:23:
An acquaintance is purchasing on contract ($175k) a home and set to close in April. Owner carrying at 5% for 39 months with 10% down.
Do I contact the present owner before closing to show interest in buying her contract?
Can you give me a scenario of an offer that might make sense in this situation.
Thanks
Doug Pelton
Re: Purchasing a contract - Posted by David Butler
Posted by David Butler on February 08, 2002 at 14:56:59:
Hello Doug,
Ahhh… if only it were that easy!
Approaching her ahead of time is usually a good strategy, if for no other reason than to find out why in the heck she is carrying back a note at only 5%???!!! This also allows you the best chance of helping insure that the note might even be worth purchasing!
Initially, information gathering is your most important objective.
What are the objectives of the parties? (buyer and seller)
What solution will best meet those objectives?
Is owner financing the solution for the objective? Why?
Seller-financing is only a tool. Learning all you can about how to do it, and how to advise a potential seller about what can be done - will not matter on an individual basis, if you don’t first find out what the the seller’s needs objectives are, what the buyer’s objectives are - and whether you can help satisfy those needs and/or objectives. The seller’s needs are what drive all note deals!
So, don’t waste time trying to persuade a seller about all the benefits seller financing might offer. Instead, find out what their needs are, and then use what you can learn here at the Cash Flow Forum to determine whether or not you can come anywhere close to meeting those needs. If you can’t do that, then you don’t want to spend a lot of time working on a possible note deal that does not offer some profit potential to you!
Fortunately, the possible solutions are here at your fingertips. There has been extensive discussion related to this subject right here in the Cash Flow Forum.
Best way to address your issues here is to suggest that you take advantage of the “Search” feature prominently displayed at the top of this Forum, and enter the various keywords that will bring up the answers for you. These would include “creating notes”, “creating notes for sale”, “simultaneous closing”, “table funding”, “seller-exemption”, “good note clauses”, “manufactured notes”, “best terms for creating a note”, “prepayment penalties”, “late payment penalties”, “Soldier-Sailor Relief Act”, and similar phrases.
You will find a cornucopia of information that should steer you directly where you want to go with this endeavor, in relation to your objectives, and with what is permissible in your state with regard to note creation!
Best of luck with your studies, and best wishes for your success.
David P. Butler