Don't Worry About an Under Appraised Property, Just Become Your Own Bank says Mortgage Note Buyers DICARO & ASSOCIATES
Chicago, IL (PRWEB) July 30, 2013 -- Most real estate agents, brokers, and pretty much anyone trying to sell a home will quickly lose hope after learning that the property they are selling has under appraised by the buyer's mortgage lender. With the right knowledge, however, a transaction can be saved through the use of “Owner Financing”. On July 25, 2013, Anya Martin of the Wall Street Journal writes "During the housing crisis, comps were sometimes hard to find, and appraisers often included foreclosures or short sales." This suggests that many real estate appraisals are actually mistakenly depressed values.
A common way to sell a property without the use of a bank appraisal entails the seller of the property to also act as the lender thereby creating a privately held mortgage note which will be held by the property seller instead of a traditional bank.
Since the property seller can approve or deny any buyer based on their own criteria, the sale of the property is not dependent upon the appraisal value.
There are many reasons why a bank mortgage loan would be denied, but the big ones are the following: 1) Unqualified borrower due to poor credit, weak down payment, and/or unverifiable income 2) Undervalued property due to a poor appraisal 3) Undesirable neighborhoods or regions.
The good news is that all of these challenges can be mitigated when the home seller also acts as the lender by “carrying the note” or creating a loan secured by the property they are selling.
However, only certain situations can be saved. If the home owner has paid down their mortgage by 50% or more and they are willing to act as the lender, hence, “owner finance” the sale of their home, and they are not in the business of creating more than 3 privately held mortgages or deeds of trust also known as “real estate notes” per year, as per the Dodd-Frank Act of 2010, then the deal can be saved.
Not only can it be saved, there is also the potential to sell that privately held mortgage for cash today.
Ironically, most traditional mortgage bankers who get calls from people wanting to sell them a series of payments secured by real estate would not even know where to begin. Furthermore, most are not aware that a true secondary market has emerged which exclusively buys and sells owner financed mortgage notes. In fact, there are dozens of companies in America today that aggressively purchase privately held mortgage notes as a primary business model.
“Owner financed real estate notes, as a medium to sell property, become more and more prevalent whenever credit markets tighten up and mortgage lending gets stale” says Nicholas di Caro, Senior Investment Partner for Chicago based DICARO & ASSOCIATES, LLC, a company that actively purchases seller financed loans secured by real estate.
According to a recent article in an industry trade publication called the Noteworthy Newsletter, it stated that there was a 12% gain in the number of private real estate notes created in 2012 when compared to 2011. And for the first half of 2013, it appears that the trend continues in an upward motion. This is partly due to the fact that many home buyers can't qualify for traditional financing because the property they want to buy has received a low appraisal.
Nicholas di Caro, DICARO & ASSOCIATES, LLC, http://www.nicholasdicaro.com/, 312-572-9109, [email protected]
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