Simultaneous closing
Encyclopedia
Simultaneous closing is a real estate
seller financing technique, whereby the private mortgage note
created by the seller is simultaneously sold to a note buyer on closing
.
Typically, the terms of the note are agreed upon between the seller and the buyer with some suggestions from the note buyer. On closing day, two transactions take place: a real estate transaction and a note purchase transaction, almost simultaneously.
Sometimes the note purchase transaction happens a few days or weeks after the real estate transaction. This depends on how early in the process the note buyer gets involved and whether or not there are closing issues with this transaction.
The buyer's motivation is to obtain more lenient financing from the seller, especially when credit
issues are or have been a problem.
The note buyer is looking for the cash flow from the mortgage note. He has to make sure that he doesn't get too involved in this transaction and thereby appear to be acting as a lender, which he usually is not.
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
seller financing technique, whereby the private mortgage note
Mortgage note
In the US a mortgage note is a promissory note associated with a specified mortgage loan; it is a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise...
created by the seller is simultaneously sold to a note buyer on closing
Closing (real estate)
Closing is the final step in executing a real estate transaction.The closing date is set during the negotiation phase, and is usually several weeks after the offer is formally accepted. On the closing date, the parties consummate the purchase contract, and ownership of the property is transferred...
.
Typically, the terms of the note are agreed upon between the seller and the buyer with some suggestions from the note buyer. On closing day, two transactions take place: a real estate transaction and a note purchase transaction, almost simultaneously.
Sometimes the note purchase transaction happens a few days or weeks after the real estate transaction. This depends on how early in the process the note buyer gets involved and whether or not there are closing issues with this transaction.
Motivations
The seller's main motivation for using this technique is to obtain cash on closing or shortly after, instead of receiving the proceeds from the sale over a period of years.The buyer's motivation is to obtain more lenient financing from the seller, especially when credit
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
issues are or have been a problem.
The note buyer is looking for the cash flow from the mortgage note. He has to make sure that he doesn't get too involved in this transaction and thereby appear to be acting as a lender, which he usually is not.