What is a simultaneous closing?
Why use a
It is a process by which someone selling their property can carry the note
or take back the note on the property and sell the note at the same time
they close on the sale of the property. Thus they sell the property and
the note virtually at the same time.
If you ask someone when they are trying to sell their property if
they would consider using owner financing to help sell the
property they would give you two reasons why they would not want
to do owner financing. The first reason is that they do not want
to be a bank and collect payments. The second objection to using
owner financing is that they need more than just the down payment.
Using a simultaneous closing would eliminate both of these
How it works
To structure the deal three key elements of information need to be
known. How much the seller needs to walk with from the deal?
Secondly the fair market value of the property. And thirdly a good
description of the property. A seller is trying to sell their
property for $100,000 but can not sell it for some reason. The
fair market value of the property is $115,000 using a simultaneous
closing the deal would be structured as follows:
Sale Price $115,000
Down Pmt $11,500
1st Mortgage $103,500
The funding source offers $93,000 for the note. We can get the
broker a fee and also give the seller exactly what they said they
needed out of the deal.
Funding source offer $93,000 seller gets two checks:
Check #1 $11,500 down payment
$93,000 - $4,500 for Brokers fee
Check #2 $88,500 net for the note
$11,500 + $88,500 = $100,000 total seller receives
The actual purchase of the note would occur two or three days
after the sale of the property. In those two to three days the
funding source is verifying all of the specifics of the closing
and sale of the property. Once the closing has been verified the
funding source will either wire the money to the seller or send
them a check for the note. The simultaneous closing process can
work with either a residential or commercial property.
A realtor loses several sales a year because the buyer can not
qualify. Using owner financing the qualifying parameters are more
flexible than conventional financing. Someone could qualify to buy
the property that might not qualify using conventional financing
resulting in a sale for the realtor. It will be easier for someone
to sell their property because the qualifying criteria is easier
for the buyer to qualify.
The closing costs using owner financing will be considerably
less than using conventional financing. The only true costs are a
credit check, appraisal and title work. There will be some other
minor costs such as documentary stamps. On a percentage basis the
closing cost are considerably less. There are never any points
charged whether it is a residential or commercial property.