Owner financing occurs when a home, investment property, or business is sold and the seller agrees to accept installment payments from the buyer rather than requiring them to obtain a loan from a bank or lender. The buyer makes a down payment on the sale price and the balance is paid to the seller over time at an interest rate and terms agreed to in writing by both parties. The terms and corresponding lien are often documented in a Note, Mortgage, Deed of Trust or Real Estate Contract. Owner financing is also referred to as seller financing, owner carry backs, private mortgages, or simply a "note".
Circumstances change and many sellers would prefer cash today rather than a small sum that trickles in over time. There are a variety of reasons people consider selling their payments for cash:
Retirement
Taxes
Investment opportunities
Expensive medical care
Vacation or college tuition
Unexpected financial changes
Peace of mind...being free from the worry of receiving late payments or having to foreclose on the buyer
Accounting nightmares, IRS regulations, paperwork hassles and the list goes on...
A note appraisal reflects the current market value of your payments similar to what a real estate appraisal provides for real property. Frequently referred to as a "quote" it shows what your future payments are worth in cash dollars today. We recommend you have your note evaluated once a year as pricing may change based on industry conditions.
The value of a note is affected by the down payment, interest rate, payment amount, and term as well as the buyer's credit rating and payment history. The type, condition, and value of the property also impact the value of your note.
The time value of money, which makes payments due now more valuable than payments due in 20 to 30 years, also plays a role in the evaluation process. Generally, due to inflation, money in your pocket today is worth more now than later. All of these elements will be taken into consideration in determining the current value of your note.
Many of the items that affect the value of your note were determined at the time the property was sold. However, keeping good records of the payments received and requiring the buyer to provide annual proof of current taxes and property insurance will help maintain the value of your important asset.
We can purchase all or part of your remaining payments. Selling part of the payments allows you to receive a lump sum of cash up front, then payments when the note reverts back to you. We can even pay cash for a portion of each monthly payment, allowing you to have a lump sum now and ongoing cash flow.
Many people elect to sell just enough payments to meet their cash needs today and keep some of the future payments as an investment or nest egg. Diversified Investment Services, Inc. always provides several options so you can select the one that best fits your needs.
The first step is to obtain a quote based on information requested through Online Quotes or by calling 1-888-999-7905. Once a quote is accepted, we request copies of the documents relating to your transaction:
Note and deed of trust, mortgage or contract
Closing statement
Pay history and current balance
Buyer address and contact information
Previous title insurance policy
Current hazard insurance policy
We then review the buyer's credit and provide a firm offer subject to review of title, appraisal, and standard documentation. Once under contract, you will receive your cash as soon as all of the documentation can be obtained. Our company handles all the paperwork and costs involved with the title update and appraisal. This typically takes as little as 10-14 business days.
The purchase price is paid in guaranteed funds (cashiers check or wire transfer), upon receipt of the final transfer package and original documents. We are happy to wire funds to the title company so you may exchange your original documents for the proceeds, assuring the safe and secure transfer of your valuable asset.
