Simultaneous Closings

Residential Simultaneous Closing

Now called TRANSACTIONAL FUNDING

The phrase “Simultaneous Closing”  now called (Transactional Funding) is used to describe transactions that occur when the seller is carrying back a note, as payment for their property, with the specific intention of selling the note for cash.  In other words, “Simultaneous Closing”  (Transactional Funding) just means, during an escrow closing, that there are two (2) separate closing transactions happening within minutes of each other.

The documents are signed and:

  1. The Buyer gets Title of the Property and the Seller receives the mortgage payments

  2. National Note Buyers buys the mortgage payments from the seller for Cash-Assignment

The advantage is the seller gets cash up front for payments that may never materialize.  The buyer then pays us the mortgage payments.   The seller is then out of the transaction altogether.

SIMULTANEOUS CLOSINGS

Simultaneous closing is a real estate seller financing technique, whereby the private mortgage note created by the seller is simultaneously sold to a note buyer on closing.

Typically, the terms of the note are agreed upon between the seller and the buyer with some suggestions from the note buyer. On closing day, two transactions take place: a real estate transaction and a note purchase transaction, almost simultaneously. Sometimes the note purchase transaction happens a few days or weeks after the real estate transaction. This depends on how early in the process the note buyer gets involved and whether or not there are closing issues with this transaction.

Simultaneous Closing

Definition

Basically, a Simultaneous Closing is very similar to liquidating any other note, except the note has no seasoning (it is brand new). Assuming that we are provided with all of the terms of the proposed note and an accurate bill of sale, we will issue a Letter of Intent that states that we will purchase the note for some given amount after the business closing, provided no changes have been made. This assures the seller that the note can be sold and for how much, even before the business closing. We can provide a check to the seller very soon after the business closing, often right at the business closing table

If you have sold a business and took back a note for part of the purchase price, we can probably convert all or part of it to CASH—-

Privately-held business notes can often be liquidated, in full or part. Liquidation of a business note can also be set up before it is even created, in some circumstances. This is referred to as a Simultaneous Closing,  Now known as transactional funding.

 

Business Note Simultaneous Closing

Definition

Basically, a Simultaneous Closing is very similar to liquidating any other note, except the note has no seasoning (it is brand new). Assuming that we are provided with all of the terms of the proposed note and an accurate bill of sale, we will issue a Letter of Intent that states that we will purchase the note for some given amount after the business closing, provided no changes have been made. This assures the seller that the note can be sold and for how much, even before the business closing. We can provide a check to the seller very soon after the business closing, often right at the business closing table.

Reasons for Simultaneous Closings

  1. The buyer does not qualify for a conventional loan

  2. It is difficult to obtain conventional financing on a business

  3. The business has been difficult to sell

  4. Owner-Financing provides more potential buyers

  5. The Seller needs cash, but his Buyer cannot provide it.

SUBJECT TO FINANCING

Seller financing is a loan provided by the seller of a property or business to the purchaser. Usually, the purchaser will make some sort of down payment to the seller, and then make installment payments (usually on a monthly basis) over a specified time, at an agreed-upon interest rate, until the loan is fully repaid. In layman’s terms, this is when the seller in a transaction offers the buyer a loan rather than the buyer obtaining one from a bank. To a seller, this is an investment in which the return is guaranteed only by the buyer’s credit-worthiness or ability and motivation to pay the mortgage. For a buyer it is often beneficial, because he/she may not be able to obtain a loan from a bank. In general, the loan is secured by the property being sold. In the event that the buyer defaults, the property is repossessed or foreclosed on exactly as it would be by a bank.

There are no universal requirements mandated for seller financing. In order to protect both the buyer’s and seller’s interests, a legally binding purchase agreement should be drawn up with the assistance of an attorney and then signed by both parties

.PRO’S & CONS  of seller financing

Benefits

Seller/buyer benefits:

  • Both the buyer and the seller can make substantial savings in closing costs.
  • They can negotiate interest rate, repayment schedule, and other conditions of the loan.
  • The buyer can request special conditions for the purchase, such as inclusion of household appliances.
  • The borrower does not have to qualify with a loan underwriter.
  • There are no PMI insurance premiums unless negotiated.
  • The seller can receive a higher yield on his/her investment by receiving equity with interest.
  • The seller could negotiate a higher interest rate.
  • The seller could negotiate a higher selling price.
  • The property could be sold “as is” so there will be no need for repairs.
  • The seller could choose which security documents (mortgage, deed of trust, land sales document, etc.) to best secure his/her interest until the loan is paid.

Drawbacks

  • The buyer could pay the loan in full but still not receive title due to other encumbrances not divulged by, or unknown to the seller.
  • The buyer could make payments faithfully, but the seller might not make payments on any senior financing that may be in place, thus subjecting the property to foreclosure.
  • The buyer might not have the protection of a home inspection, mortgage insurance, or an appraisal to ensure that he/she is not paying too much for the property.
  • The seller might not get the buyer’s full credit or employment picture, which could make foreclosure more likely.
  • Depending upon the security instrument that was used, foreclosure could take up to a year.
  • The seller could agree to a small down payment from the buyer to assist in the sale, only to have the buyer abandon the property because of the minimal investment that was at stake.

Questions

1. What is meant by Simultaneous Closing? The phrase “Simultaneous Closing” is used to describe transactions that occur when the seller is carrying back a note, as payment for their property, with the specific intention of selling the note for cash.  In other words, “Simultaneous Closing” just means, during an escrow closing, that there are two (2) separate closing transactions happening within minutes of each other.

2. Are there any guidelines for this type of closing?

Yes, one is that the buyer of the property needs to have a  FICO Score of 550 or more.

Because every note has different circumstances it is difficult to walk you thru the steps here.  If you have a situation you wish to discuss please e-mail us at  maxicash55@gmail.com or call us at (603) 937-7459 and we will be happy to walk you thru the steps.

  If you have a situation you wish to discuss please e-mail us at  maxicash55@gmail.com or call us at (603) 937-7459  and we will be happy to walk you thru the steps.