INSTALLMENT SALES SELLS YOUR HOME QUICKER!
Here's how the process works:
The property buyer gives some money to the property seller (this is the down payment). Then, instead of going to a lender and borrowing the rest of the money and signing a note secured by the property for the rest of the purchase price payable to the lender, the buyer signs a note for the rest of the purchase price payable to the property seller.
This is called an "installment sale," because the buyer pays the seller in installments. THIS IS NOT A LOAN.
Thus, the property owner receives a down payment and a note which obligates the property buyer to make monthly payments to him the same kind of note the lender would have.
What happens if the buyer doesn't pay?
The seller forecloses and gets the property back.
For example, on a $200,000 house, a buyer might give the seller a $40,000 cash down payment, 20%. The buyer then signs a note, which is a legal IOU, for the balance of $160,000. The note specifies how the $160,000 will be paid back by the buyer; so many dollars per month for so many months at a certain interest rate. If the house buyer fails to make his payments, there is language in the note that allows the house seller to foreclose and take the house back. If this happens, the seller can keep all the money he has received, including the down payment, and re-sell the house (if he wishes, or rent it, whatever he wants it is his property once again).
In this situation the buyer pays the house seller every month instead of paying a lending institution. The note (IOU) the buyer has signed and is paying on to the seller CAN BE SOLD BY THE SELLER to receive full or partial cash of the note. Note brokers (sometimes called cash flow brokers) contract with property sellers to re-sell these notes to investors.
You may be wondering, why would a seller do an installment sale? Why not just tell the buyer to go to a bank, borrow the money and pay all cash? In a strong economy, that's what sellers do. But when it is not as easy to qualify for mortgages a lot of people can't get mortgage loans from lenders, and because of that, properties don't sell as fast. Or, in an economy like today, interest rates are low but there is a lot of houses in many markets, making it tough to sell a house. And when property owners need to sell, and it's a market like those in many areas of the US, offering seller installments as described above makes it possible for them to sell faster and often at a higher price.
Thus, the more active the market, the less this technique is necessary. A slow market means lots of notes are created.
Until 2009, anybody who could fog up a mirror could get a mortgage. Home sellers didn't need to offer to "take back" a note. As a result, the supply of good notes secured by single family homes dried up. That's why I've long advised people looking for existing notes to buy or broker to forget houses and focus on other types such as commercial and business notes.
We have turned the corner. Home sales have plummeted in most parts of the country, and sellers are starting to take back notes, creating notes to buy or broker.
Today most sellers (and their agents) are pricing houses too high. They think they can still catch the tail of the comet. They are wrong -- the comet is long gone, circling Neptune by now. That's why houses languish on the market.
But sellers will soon hear the crack of DOM -- Days On Market, the average number of days properties in a given area are on the market until they are sold. All over the country sellers are waking up and starting to offer incentives, and the best incentive is seller installment sales. The future is bright, indeed, for Sellers to SELL THEIR HOMES FAST for CASH OR LONG TIME INCOME!
"We are a Real Estate Service that 'HELPS PEOPLE' like yourself who want or needs to sell their house fast by BUYING IT!"
Understand the time value of MONEY! A dollar to be received in the future is worth less than a dollar received today!
Please contact me at (609) 241-4309 so I can answer any of your questions.