The country’s 24th most populous state spans from Hilton Head Island to Myrtle Beach, and inward to Columbia and Greenville. Across that beautiful land are millions of properties, a number of which were sold using owner financing instead of traditional bank financing. A South Carolina note buying company like Seascape Capital has often then gotten involved by purchasing the note from a property seller.
Let’s back up and review some basics. An owner financed transaction occurs between a person selling a property and another wanting to buy it. A mortgage note is created between the two individuals or parties that show, among other things, the amount owed by the buyer, the interest rate, term, payment amount, and due dates of payments. Payments are usually on a monthly basis and continue until the note balance is zero. The best notes are on nice looking properties that are sold to someone who has put in a large down payment and has strong credit.
Risks of a Note
The person who sold the property is generally called the seller or the note holder, and has options on what to do with the note. He or she may decide to keep the note and receive the ongoing payments. Of course, they should be aware of the risks of holding a note, which include:
- Late payments and the collection of late fees
- Default by the buyer, which can lead to beginning of a long and expensive foreclosure process
- Degradation or damage to the property, which may cause it to lose value
- Keeping current the property taxes and fire insurance
Selling a Note
Alternatively, the seller could decide to seek out a buyer for the note. A good South Carolina note buying company can help explain the elements of a good note and the process for selling it. Let’s say that you have a $100,000 note, paying a 7% rate over 30 years. The company could offer different options for either buying all or just some of the remaining payments. Your choice can be driven by how much money that you need now.
If you do decide that you would like to sell your note, it is good to know what to expect. Here are the usual steps:
- Contact 2-3 note buyers. Choose the one that can not only give you a fair price for the note, but has also been in the business for at least 5 years, is licensed in their home state, and has a high rating from the Better Business Bureau.
- Your chosen note buyer will give you the offer in writing, check the credit of the payer, and ask for copies of the documents related to the transaction.
- Once you have sent over the requested documents, the note purchaser will order and pay for a drive-by appraisal.
- Next, the note investor will order a title commitment to see whether the property taxes are current and if there are other liens against the property.
- Once the above steps are complete, the note buying company will send you documents to take assignment of the note, which you would sign and send back.
- The note buyer then wires the funds or sends you a check within a few business days.
Seascape Capital is a nationwide note buyer based in San Diego, California. Seascape is fully licensed in California and has an A+ rating from the Better Business Bureau.