Pain, Motivation, Emotional Reasoning,Etc. (Long) - Posted by Michael Morrongiello
Posted by Michael Morrongiello on February 15, 2001 at 08:11:22:
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,