- Image by sean dreilinger via Flickr
Simultaneous Closings are the new hot item in the real estate industry. What is a Simultaneous Closing? There are many different types. One is when a home seller creates a note for the buyer to facilitate the sale of his property, and then sells the note to an investor at the same time.
The Simultaneous Closing is nothing more than creative financing. We all know that it is much easier to sell real estate if owner or seller financing is available. However, most sellers do not want to take back financing. They do not want to play the role of a bank, but if the seller can take back financing long enough to create a note, that note can be sold to an investor, allowing the seller to cash out of his property. Here’s how it works.
Say a seller has a property he’s been trying to sell for months at $100,000 and no buyers have surfaced. With a simultaneous closing, the seller can advertise the property as owner financing with no need to bank qualify. This will create an abundance of buyers. Working with an investor, the seller finds a buyer who is able to put $20,000 down and agrees to take back the balance of the financing, subject to being able to sell the note. With the buyer of the property identified and the conditions of the note agreed upon, the investor buys the note from the seller once the note has been created. Here’s what it looks like:
| Sale Price | $100,000 |
| Down Payment from buyer | $20,000 |
| Note created by seller | $80,000 |
| Amount supplied by the investor to purchase the note | $72,000 |
| Total amount to the seller | $92,000 |
The seller gets $20,000 down and $72,000 from the sale of the note, for a total of $92,000. Although the owner didn’t receive the full asking price for the property, he still sold for a good price. In fact, the seller probably would have sold his property a hundred times if he got an offer for $92,000. Of course, if there were any liens on the property, they would have to be paid off with the proceeds of the sale.
Simultaneous Closings are a great tool for people trying to sell their homes. Buyers can be identified quickly and, by working with an investor or funding company familiar with simultaneous closings, the whole process can be a quick and easy method of selling a property.
- Article courtesy of the International Association of Investors
