Re: Deferred Buyer Financing - Posted by Brent_IL
Posted by Brent_IL on December 01, 2000 at 12:11:57:
Yes, it is more than feasible; it is second only to the sale itself as a major seller benefit for carrying the paper. PRE-STRUCTURED PRIVATE MORTGAGE FINANCING PROGRAM means seller carry-back. The interest due the seller is accrued or accumulated to generate a larger pay-off sometime in the future. Read the sidebar on the left of Bill Gatten’s homepage (www.cal-equity.com) to understand the advantages of doing it within a PACTrust. It?s not hard to learn. You don’t need to pay another company to tell you how to do it. Play with a financial calculator and observe how changing any given term affects the other values.
A seller will accept your idea if he believes it is in his best interest to do so. If he thinks he can do better, he will not.
$100,000 FMV $50,000 existing loan-$500.00 payment
Use PACTrust, no due-on-sale. Buyer makes payments on loan.
$20,000 cash paid to seller by buyer.
12% 30-year $30,000 note carried by seller @10% schedule and 2% deferred. Ten year balloon.
"Mr. Seller, if you list with an agent, after perhaps six months of uncertainty, you might sell your house for the listing price. By the time you pay off the first mortgage and pay a $6,000 RE commission, you are left with $44,000. During the time you’re holding the property you still have to (make payments, bad tenants, damage, et al). When you accept my offer here’s what happens. I make the payment on the 1st mortgage so you are off the hook. You get $20,000 in cash at closing. You receive $268.27 every month for 119 months, a total of $31,329.31. When you get the 120th check it will be for $38,448.98.
$20,000 cash down payment
$38,448 120-month balloon
$139,777 Total dollars to you.
By spreading less than one-third of the sale price over 120 months, you can double your profit (139,777-50000=89,777. $89,777 / 44,000 (without your offer) = 2.04) and save on taxes, too. Press hard, there are four copies.?
The variations and combinations are endless, but the offer must work for you before you can present it as the solution to the seller?s problem(s). To a seller who doesn’t need all cash, it’s magic.