Real Estate Notes and Todays Markets

The government’s plan for real estate stimulus has left a lot of sellers and buyers in a lurch to put it mildly. The user un-friendly system has left many sellers with property that is hard to sell with traditional finance company scenarios. This same system and the big banks stimulated by the government’s real estate bailout have made it difficult for buyers with substantial down payments to get financing. In today’s economic environment a credit score above 600 is rare and most banks will not finance without a credit score well above that, therefore even with a large down the buyer still cannot qualify.




A shift in real estate thinking and financing is due. Real Estate agents and brokers need to alter the train of thought. Big Banks and Government is not the answer to the current housing market lows. Peer-to-Peer financing may be.



The new trend, well not really. Peer-to-peer or seller financed sales have been around longer than the banking industry. To define simply peer-to-peer financing is the buyer and seller agree to the price and terms, and the buyer makes installment payments directly to the seller. This direct system eliminates the bank, but it puts the pressure of accounting and collection on the seller.



Given our economic crisis and the inability of most buyers to qualify for a bank loan, peer-to-peer financing is on the rise. This puts sellers in a difficult position carrying a note worth $100,000.00 at 10% interest for 30 years does not make cash available for emergencies or the little surprises of life. This system puts real estate agents and brokers at the end of the sales road with a particular seller, but there is a solution.



Real Estate agents and brokers can offset this dead-end by finding a reputable note finder. Note finders, find notes like the ones created by peer-to-peer financing in turn they contact their list of investors and bring the note and the investor together. This transaction goes thru the same escrow process as the real property. When escrow ends the original seller has money in hand and the note belongs to the investor. Now your original seller has money to buy the new home.



There are always events to consider when making such a suggestion. The note has to have equity for the investor or Investment to Value. Note seasoning is also a consideration, but there are investors who will look at youthful notes. Real Estate professionals need to consider that all though the piggyback sales may not be as quick as with a traditional finance, facilitating an impossible sale may bring you a landslide of referrals and a real estate customer for life.

Peer-to-Peer Financing

The new trend, well not really. Peer-to-peer or seller financed sales have been around longer than the banking industry. To define simply peer-to-peer financing is the buyer and seller agree to the price and terms, and the buyer makes installment payments directly to the seller. This direct system eliminates the bank, but it puts the pressure of accounting and collection on the seller.
Given our economic crisis and the inability of most buyers to qualify for a bank loan, peer-to-peer financing is on the rise. This puts sellers in a difficult position carrying a note worth $100,000.00 at 10% interest for 30 years does not make cash available for emergencies or the little surprises of life. The seller cannot call the buyer 2 years later and change the terms or claim a hardship and demand payment in full. The seller is holding a note of decreasing value and a note he no longer wants to carry.

There is an option, the seller can sell the note.