Simultanious Close

Comments(5)

• 
  dgruell20th July, 2004

  To answer your question, Yes simultaneous closing is legal. It is a creative stratagy, but can be employed with sucess under the right cirmcumstances. Lets first look at what is a simultaneous closing?
  
  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.
  
  Then the question is why use a simultaneous closing?
  
  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 objections.
  
  
  
  How it works
  To structure the deal three key elements of information need to be known. First, how much the seller needs to walk with from the deal? Secondly, the fair market value of the property. Thirdly, a good description of the property is needed.
  Below is an rough sketch of how the transaction works.
  
  For example, 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
  
  30 year term, 9% , monthly pmt $832.78, 7 yr balloon = $96,918.39
  
  
  
  The funding source offers $93,000 for the note. This way the broker can get a fee and also give the seller exactly what they said they needed out of the deal.
  
  
  Funding source offer: $93,000
  + Down Payment of $11,500
  = $104,500
  - $100,000 (what the seller needed)
  = $4,500 broker fee
  
  Funding source offer $93,000
  Consultant fee - $4,500
  Net for the note $88,500 $88,500 net for the note + 11,500 down payment = $ 100,000 to Seller.
  
  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.
  Hope this helps
  -Daniel Gruell
  
  
  [ Edited by dgruell on Date 07/20/2004 ]

• 
  gc2004mrhome21st July, 2004

  Thanks Daniel, that clears things up a bit. Now i understand how this company that contacted me can work, they provide funding for owner financing and i find property and buyer. this might just work for me. Thanks again

• 
  lafinancial21st July, 2004

  Also figure that the buyers credit score plays a big part as well. In that example I would say the buyer had excellent credit. If buyer had decent credit the discount would be greater. Owner financing opens the sale of a property to a more range of buyers. Thus this company that sent you an email can probably buy any grade A or decent looking note.

• 
  gc2004mrhome21st July, 2004

  thanks again Daniel, now if i can just contact this company and find out what their requirements are I'll be on my way.

• 
  LoriBlock24th August, 2005

  Regarding the above scenario, my company can play the role of broker, we have many investers in simultaneous closes of private mortgage notes, or seasened notes as well.
  
  Lori