The Prairie State, ranging from Chicago to the Mississippi River and on down to Carbondale, is the USA’s 25th largest state. Thousands of properties have been sold here over the past few years using owner financing. A mortgage or deed of trust was generally created for each sale, accompanied by a real estate note listing the payment terms and related information. Often, the seller of the property decides to sell his or her note to an Illinois real estate note buyer.
Illinois allows the use of either mortgages or deeds of trust in property sales. The two types are similar in most ways, though deeds of trust do have certain advantages for the seller of the property.
Long before an Illinois real estate note buyer get involved, the property owner has some decisions to make. Once the owner has decided to sell the property, they will need to figures out the value of the property, how much of a down payment to demand, and the terms to be required. The seller can look for potential buyers by using a traditional realtor or by using other means to publicize the sale.
Once a buyer has been identified, the property seller and buyer will need to agree on the pricing and terms. An attorney or title company could then prepare all of the needed documents. Both parties would sign the documents, and the property buyer would begin making payments on the designated dates.
Selling a Note
Once the property seller has begun receiving payments, they have the option of selling their note. By doing this, they can get all of their cash up front and avoid the risks of the buyer missing payments, letting property tax payments or the fire insurance lapse, or not maintaining the property. A good Illinois real estate note buyer can explain the various pricing options, the note sale process, and what paperwork will be required.
In regard to pricing, the note holder (property seller) can choose to either sell the full note or only some of the payments. If choosing to sell the full note, the note holder would assign all future payments to the note buyer. The latter will generally offer to buy the note at price less than the current balance. The price will be determined by risk factors such as the property type, whether the property is owner-occupied, the credit history of the property buyer, and the amount of equity in the property.
If the note holder does not need all of the cash from the note right then, he can choose to sell a certain number of payments. By using this alternative, he gets less money at the beginning but will receive more in total.
The Note Sale Process
Once the note holder and note buyer have agreed on a price and credit has been checked, the normal steps are:
- The note holder would be asked to sign an agreement and send over copies of documents like the note and closing statement.
- The note buyer would review the documents and order a drive-by appraisal to ascertain the value of the property. Typically, this takes 7-10 days.
- Next, the note buyer would order a title commitment, which takes about the same amount of time as the appraisal.
- Assuming that there are no issues with the above, the note holder would receive documents to assign the note, which he would sign and send back along with the original note.
- The note buyer would record the assignment and wire the funds to the note holder. From start to finish, the entire process usually takes 4-5 weeks.
Seascape Capital has been buying notes since 2002 in all 50 states. Seascape has an A+ rating from the Better Business Bureau and is fully licensed in its home state.