How Do You Turn A FSBO Into A Note.
I have a question about turning the FSBO into a note. I have a pretty good idea of getting the owner to finance for a buyer, but i want to know how then should we go about the process. Should we find a buyer for the owner, market his home, or how do we do this. Then how do we turn this to a note.
definitions:
FSBO=For Sale By Owner---selling some sort of property by owner rather than using an outside party to assist in the transaction
note=promissory note-- a written promise to pay or repay a specified sum of money at a stated time or on demand
I don't follow what you are trying to say here at all. I think you may be confusing some terms. That is fine but slow down and tell us what you are looking to do in plain english.
I think that you need to do some more reading and possibly a course. Be careful about investing as you can lose a lot of money if you don't know what you're doing.
GOOD LUCK
What you need to do is as follows. I am not say this will be easy.
1. Find FSBO that is worth more then the owner wants for it. Not a lot more, but a bit more.
2. Seller changes his price to something higher that reflects the added value of the seller financing to the buyer. The house still needs to be fair value to keep the deal healthy.
3. You discuss with the FSBO seller before he agrees terms with the buyer, what terms you would like to see in the note. Size of note, conditions, interest rate. You also agree the discount that the seller will take when selling the note.
Unless you are using your own money you are speculating as to what you can get the seller for their note. Watch out.
At the close of escrow the note is created to complete the property purchase. At the same time or later the note buyer does a separate deal with the note owner (the seller of the FSBO who took a note) and the cash ends up in the hands of the FSBO home seller.
I am sure you know that selling a 2nd note that was just created is next to impossible or there will be really large discounts.
Even a new first with great terms and great borrower credit scores will attract a noticeable discount. Hence the FSBO seller really needs to have this in mind.
Think of a FSBO seller who has two prices. The price they will take for all cash and a 7 day close vs the full price that comes with seller financing, 30 day close, lots of inspections, etc.
Questions?
If you are only brokering then make sure the deal is clean and you do not appear as the mortgage broker to the borrower.
Side note - I do such deals. They are not as easy to set up as some Note courses imply. Brokering only makes it harder. I use my own money.
John
[addsig]
Thank you very much i really appreaciate it. I plan on brokering them. Again the reason why i wanted to know is because i have access to a list of FSBO & i would like to use the list to my advantage. Since you know & do this already maybe I can send you some of these FSBO, with your terms, to you for a finders fee. (I have access to almost every state & major metropolitain area)
[ Edited by R2LRN on Date 09/20/2004 ][ Edited by R2LRN on Date 09/20/2004 ]