Seller Carry Back Notes or Seller Financing

Creative financing had dropped off quite a bit over the last few years given the lending environment and "easy money" or "easy qualifing."  The real estate market has of course changed quite a bit and the "easy financing" days are well behind us. 

So, what do sellers do now?  They have to get more creative in structuring their transactions.  It a buyer's market, so transactions have to be structured to assist (read encourage) the buyer to buy.  Naturally, the seller carry back notes have made a comeback.  We are seeing much more creative financing in terms of seller carry back notes or seller financing than what we did over the last few years.

Proactive Planning Required

However, sellers need to be proactive when structuring the sale of their property using seller financing.  Do they really want to carry back a note?  Do they really want to service the note over an extended period of time?  Are they thinking about converting the note to cash or holding for investment?  Do they want to complete a 1031 exchange on the sale of their relinquished property, and if so, how will they convert the note to cash so that they can complete their 1031 exchange by acquiring replacement property.

Consult with a Note Expert or Note Broker

Sellers should consult with a note expert or note broker.  These individuals can help you structure your seller carry back note based on your intentions or objectives, especially if you intend to sell the note.  You want to make sure the note is marketable in the event that you want to convert it to cash. 

Complications with 1031 Exchange

You can use a seller carry back note with the sale of your relinquished property when you are structuring a 1031 exchange transaction, but you need to discuss the issues with Exeter 1031 Exchange Services, LLC in order to better understand and better prepare for your 1031 exchange. 

In anticipation of these complicated issues, we have designed our radio show on Monday, May 5, 2008 around seller carry back notes or seller financing.  Dawn Rickabaugh with NoteQueen.com will be with us to discuss seller financing in today's markets.

Our Discussion Will Include The Following:

1. Why you must know how to carry paper in this market in order to:

• close your real estate transaction while other properties languish on the market
• get your price by offering terms
• defer capital gains
• create cash flow for retirement
• leave a good inheritance for your loved ones

2. How to structure a good seller carry back note

3. Why you need to work with a note professional BEFORE you take back a note!

4. How the secondary trust deed market determines the market value of your note:

• protective equity
• credit score of the payor
• payment history
• seasoning

5. How to feed and care for your note once you have it (use a note servicing company)

6. How to sell all or part of your note to raise instant cash

7. How a Professional Note Appraisal can save your family $thousands$

8. What a potential raise in the Federal capital gains tax rate could mean for you

9. How seller financing works within the context of an exchange

10. How real estate professionals can close more deals by knowing about seller financing

You can learn more about The Exeter Group Real Estate Talk Radio Show at http://www.exetergroupradio.com for complete details and instructions on how to access the show on Monday, May 5, 2008 at 12:00 noon PST.