From Sioux City to Davenport, Iowa is known for its cornfields and rolling plains. Did you know that Iowa is the only state whose east and west borders are completely formed by water? In between those rivers lie a huge number of properties, some of which have been sold with owner financing.
When a house or building is sold using owner financing, the seller carries a note stipulating the payments and interest rates that the buyer must pay upon. The seller can keep the note or sell a real estate note in Iowa or other states. If the seller holds on to the note, he or she stands to enjoy a steady income stream but runs the risks of:
- Late payments or outright default
- Missed property tax or insurance payments by the buyer
- Damaged or declining value to the property
In regards to the first point, the note holder (seller) must determine what the buyer might do in case of a job loss or family medical issue. Will the person still have the ability and willingness to continue to make payments?
Selling a Note
The alternative to keeping it is to sell the Iowa real estate note. After receiving at least a couple of payments, the note holder might choose to contact 2-3 companies that buy Iowa real estate notes. When deciding which note buyer to partner with, consider:
- Are they able to give you a fair and realistic price?
- Do they seem competent? Have they been in business for at least five years?
- Do they have a high A+ rating from the Better Business Bureau?
- Are they licensed in their home state?
- Does your intuition tell you that your contact person is trustworthy and service oriented?
Once you have chosen a real estate note buyer and agreed upon a price, the process usually looks like this:
- The note investor will give you a written offer and request copies of documents like the note and closing statement.
- The investor will verify that the payer has good credit.
- A drive-by appraisal will be ordered and paid for by the note buyer.
- Assuming that the appraisal is okay, a title commitment and policy will be ordered by the note buyer.
- Documents will be sent to you for assigning the note, which you will sign and return.
- Within 1-5 business days, the agreed upon funds will be wired to you or sent by check.
From the time that you send copies of your documents until you receive funds generally takes about one month. Some transaction can close more quickly, while others may drag out if there are issues.
Since 2002, Seascape Capital has developed a reputation for being the best and most service-oriented note buyers. Seascape has an A+ rating from the Better Business Bureau, and has worked with a number of Iowa note sellers.