Can there really be a win/win deal? - Posted by Tom Brown - WA

import · February 14, 2001, 9:20pm

Posted by Michael Morrongiello on February 15, 2001 at 19:39:50:

Tom:
The short answer is As much as you can earn…

Remember you are not purchasing this note with your funds and then reselling it. If you are brokering the seller financed mortgage and note then you are bringing (2)two parties together, the note seller and the paper investor. Your fee would be the “spread” between what the paper investor would pay (typically somewhere between $73,500.00 to $75,500.00) for the $80K 1st lien mortgage note assuming it was properly screened and structured up front, and what your note seller will accept. If that magic number is $72,000.00 then you can figure the “spread”. If you can negotiate a lower pay price with the note seller then that is to your benifit.

By the way, we never disclose to a note seller want the note brokers fee is if we are funding a deal.

To your success,
Michael Morrongiello

import · February 14, 2001, 9:20pm

Can there really be a win/win deal? - Posted by Tom Brown - WA

Posted by Tom Brown - WA on February 14, 2001 at 22:20:55:

Can there really be a win/win deal?

OK, I’ve read that one way of “finding” notes to is to help FSBO sellers create their own note as a way of selling their home faster and easier. So they’re very grateful to you. So far, so good.

But then you turn around and say, “By the way, I’d like to buy that note you just created, but at a discount.” Are you still “helping” the seller, or does a light suddenly go on in his/her head that says, “This guy’s really just trying to take me to the cleaners like everybody else.”?

Can there really be a win/win deal when you immediately buy the newly-created note at discount this way? Obviously there’s a way it makes sense to the seller, because it’s a common occurence, but as a newbie, I don’t see how the numbers could work for the seller.

Any enlightenment handed out would be appreciated!

Tom

import · February 14, 2001, 9:41pm

To sell or not to sell? - Posted by Michael Morrongiello

Posted by Michael Morrongiello on February 14, 2001 at 22:41:12:

Tom;
Whats better for the FSBO property owner or for that matter any property owner who wishes to sell their property and move on with their life?

Is it better to continue to advertise, promote, list, and relist, or not even list (because they are turned off by Realtors)their property in an effort and hopes of selling it?, or to consider what the creative note broker, promoter can offer them in the way of Showing them a FAST, Surefire way to sell just about ANY property in just about ANY marketplace, so that they will still get enough cash that “gets them where they wish to go” and CAN move on with their life?

Being involved in Real Estate and more specifically the financing end of it for so many years, I am continually amazed at how “Everyone wants all cash…” , “they won’t accept anything other than an all cash sale, etc.” however often these same property sellers when presented with realistic “options” that can truly solve their short term dilemma often are more than willing to accept somethng far less than an all cash sale.

Remeber my cardinal rule; “Never think for the other Guy/Gal…” - present to them what you can realistically do for them and let them tell you what direction they wish to head in.

To your success.

Michael Morrongiello

import · February 14, 2001, 9:50pm

Re: To sell or not to sell? - Posted by Tom Brown - WA

Posted by Tom Brown - WA on February 14, 2001 at 22:50:02:

Thanks again for your patient responses to a newbie, Michael. Yes, I can understand a seller willing to take a $20,000 down payment and $80,000 carryback in order to make a quicker sale.

Mission accomplished: house is sold, with the note broker’s help and guidance.

But now the same seller is willing, within hours or days to accept, say, $60,000 cash for the new note? Is it just the “psychology of cash” which would prompt someone to do this? Or can you show the seller some numbers which actually make this a better deal than holding the paper instead?

I guess I’m asking, is it an emotional decision for the seller or can make sense financially for her to sell the note right away at discount?

Sorry if I’m being dense,
Tom

import · February 15, 2001, 7:11am

Pain, Motivation, Emotional Reasoning,Etc. (Long) - Posted by Michael Morrongiello

Posted by Michael Morrongiello on February 15, 2001 at 08:11:22:

Tom:
Most notes if properly structured can be sold with discounts of around 10% or so off their outstanding receivable balance, so having a seller / note holder willing to accept $60K for their $80K note is an extreme example. If a competent note broker had gotten involved in assisting with the initial “structure” of this deal, then more than likely the question to the property /note seller would be this;

Do you wish to hold on to your $80K note that pays you $$$ per month for so many years, or would you prefer to cash out the note and obtain $72K +/- in cash now?

The answer to that question will depend on the fears, motivation, so called “pain”, and goals that the property/note seller wishes to acheive.

They very well may prefer to have the CASH and the use of that cash now, albeit even at a slighty lesser amount than having to worry about monthly payments “dribbling” in, following up on tax and insurance payments by the payors, and the worry of a possible foreclosure on the note in the future. They might have another business opportunity that they can take advantage of, IF they had the cash. There are numerous reasons why a seller might like cash, as oppose to the income stream that a note can generate.

The main point here is that in my humble opinion, homes sell more EASILY & Quickly if they are being marketed with “Flexible Terms” regardless of the sales price. I see all too often Realtors advising their clients to “lower the listing price” in an effort to move one of their lingering listings. Yet when they do this, the property STILL does not sell.

Most often its the repayment TERMS offered by a property seller NOT the PRICE that will determine how quickly one can move their property. IF you can expose your property to many more potential buyers that otherwise did not think they could get into a home and offer to finance them to boot, then your going to create a more agressive approach to moving your home.

Seller financing and the USE of seller financing both as a Marketing and financing tool allows for a property owner and would be seller to do just that, to expose their property to a much LARGER pool of potential buyers that exist in the market.

Making the connection for yourself and your sellers that the Seller Financing CAN BE converted easily and almost harmlessly into immediate CASH through its sale is a revelation for most people. When they see this, and become comfortable that it can be done, often it means making a deal happen or not.

To your success,
Michael Morrongiello

import · February 15, 2001, 11:21am

One more step… - Posted by Tom Brown - WA

Posted by Tom Brown - WA on February 15, 2001 at 12:21:35:

Thanks, Michael, I get it now. Can I try your patience to the extreme with one more question? After I buy the newly created note from the seller for $72,000, and assuming I helped structure the note properly, how much profit would I (the note broker) be likely to receive from a large funder if I turned around the sold it?

This one more step would complete the general picture for me of “table funding,” as I guess it’s called.

Thanks, thanks, thanks,
Tom