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Simultaneous Closings
A Simultaneous Closing is first and foremost a transaction that involves a purchaser and a seller of a piece of real estate. The seller of this real estate will play two roles in this transaction: (1) as a seller of the real estate and (2) as a lender. The seller is considered a lender in this case because they will be creating a loan via owner financing for their prospective purchaser. Once the loan has been created between the seller and purchaser and all necessary paperwork has been signed to consummate a legal transaction, it will be the seller’s (lender’s) intention to sell that loan to a third party at a predetermined price. This loan is usually sold to the third party 2-10 days after the paperwork has been signed.
You may ask if this is a “simultaneous closing,” why does the sale of the loan take 2-10 days after the creation of the loan? The answer to this is that the term “simultaneous closing” is actually a misnomer. When a loan is sold at the time of closing, the real estate note industry refers to this as a table funding. In order to conduct a table funding, most states require a lender’s license to do so.
The reason we use the term “simultaneous closing” to describe this type of transaction, is because it is an industry recognized term used to describe the scenario. All parties involved in this type of transaction should be made aware from the beginning of the process that the actual sale of the new loan will not be completed until an average of 2-10 days have passed.
Why Use Simultaneous Closings?
Simultaneous closings are an excellent tool for conducting real estate transactions that do not qualify under traditional lending guidelines. The reasons that some transactions do not qualify are many and varied. For example, the proposed borrower in the transactions may have poor credit, a low down payment, no seasoning of their down payment money, poor job history, poor debt to income ratios or all of the above.
Sometimes the inability to obtain a loan through traditional means will be a result of problems with the property itself or the seller of the property. For example, the seller has owned the property for a short period of time (lack of title seasoning), the property may have zoning issues, the property may be in a state of disrepair or other problems of which are too many to list here.
Through simultaneous closings, these issues can be readily overcome with the help of a knowledgeable professional in the real estate note market.
Simultaneous Closings Can Be Used for Transactions on Various Types of Properties Including:
- SFOO (Single Family Owner Occupied)
- SFNOO( Single Family Non-Owner Occupied)
- Commercial
- Investor property
- Strip malls
- Land
- Mobile Homes w/land
- 1-4 unit properties
- Multi Family Homes
- Hotels
- Retirement Homes
How it Works:
1. The Seller sets the sales price to the appraised value of the property and advertises seller financin
2. The seller then decides on a prospective buyer; one they can trust that will make the monthly payments
3. The Seller and Buyer then agree on the structure and terms of the note to be created and sign a Real Estate Purchase Contract
4. At closing, the Seller will create a 1st mortgage and simultaneously sells the mortgage note to Pinnacle Investments.
5. The Seller receives the Buyer's down payment plus the proceeds from the sale of the note. The seller is usually responsible to cover the closing costs.
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