I believe the most important thing you can do is to “find” yourself . . . and then “BE” yourself!  Are you even looking for who and what you are?

If not, spend some time every day seeking what it is that gets you going.  What’s fun?  What makes you laugh? No one is going to jump out of bed in the morning to “pay the bills”, or “do the report”, or take care of all the other obligations they have.

Your obligation is to be true to yourself! To trust and honor what you know in your soul is the “thing” that would make your heart sing. There’s nothing musical about paying the water bill!

You want to be the best damn (mother, father … fill in the blank) you can? Be the best damn YOU first! But go for self-discovery before self-development! We get so busy improving ourselves without even considering who and what we’re improving!

That “thing” is out there.  Look for it . . . acknowledge it . . . treat it like the gift and gem that it is: the shining light of your truth.

Don’t be afraid.  No . . . go ahead and be afraid.  Just take the steps anyway.

“We cannot discover new oceans until we have the courage to lose sight of the shore.” - Gide

Start rowing … and by the way, the oars are out in the garage, so you’re going to have to get out of bed anyway.  Jump!

Jerry

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I got an email from Kay, who found me as a result of an Investor’s Business Daily interview: Seller Financing Can Seal the Deal in Rough Market. She was thrilled, and so was I, that we only lived 5 miles apart. (It’s always fun when you get to work with people in your own back yard).

She and her husband had an escrow that was falling apart, and they asked me to step in and put it back together. If this deal didn’t close, then they would most likely lose at least another $50,000 on this southbound investment.

Here’s the scoop:

A British buyer had originally made an all cash offer on a $764,000 home. He put down a non-refundable deposit of $24,000, and was willing to walk away from it when the pound dropped substantially against the dollar, virtually overnight.

For him to liquidate enough of his own currency to complete the deal right now would effectively make his purchase price $900,000, and that didn’t mix well with his Earl Grey.

The sellers and I weighed the wrap (AITD) against subject-to and land trust transfer: seller financing on steroids - a technique to prevent the bank from being able to ‘call’ the note on any underlying financing left in place.

Here’s how the sellers made the transaction more palatable for the buyer and created a win-win-win-win-win (2 principals, 2 real estate agents, and 1 note pro):

Buyer made a $194,400 down payment, and took the property subject-to the sellers’ interest-only loan: principal balance $569,600, fixed at 7.25%. By George! Now he could put his focus back on the Breeder’s Cup!

As it becomes economically attractive for him to do so, he will liquidate pounds for dollars and pay off the underlying financing.

(After the holidays, won’t we all wish we could liquidate pounds for dollars?!)

I would have preferred that we had done a wrap (even if the interest rate was at par with the underlying financing). While both strategies are equally underwritten, the wrap would have given the sellers the right to foreclose in the unlikely event that the buyer quits making his monthly payments. Not that they would be willing to soak more money into the investment, but they would have retained more control.

The land trust transfer would have been watertight against potential loan acceleration, but the buyer’s financial strength made it an acceptable risk, so we elected not to try and educate everyone about this particular strategy.

Seller financing saved this Pasadena escrow and made everyone very happy: sellers got to sell, buyers got to buy, and agents made commissions. Now isn’t that some lovely jubbly!

Related Reading:

• Very Scary Halloween Notes: Due on Sale (Santa?) Clauses
• Seller Financing and Land Trusts - Secrets of Liquidity After PTSD in the Real Estate Marketplace
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I’ve been nurtured by the inspirational messages that he sends out every morning to his long list of subscribers, as well as by his powerful and generous essence and presence in my life for the last 3 years.

This is a Note Queen blog, and there are many different types of notes. I think we need “Inspirational Notes” just as much as or more than marketable real estate notes and creative real estate solutions. He’ll be adding a weekly inspirational note, probably each Sunday (so if you don’t go to church at least you have something to help save your soul) JK

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Or would you rather pull the blankets over your head and forget about facing that big bad world out there?

I used to vote for the second one.

I’ve been in the Real Estate business in various capacities for going on 20 years, and many of you who are involved in the industry in one way or another are feeling the chilliness of this market environment.

Baby, it’s cold out there … and I’m not talking about the weather!

I, for one, am thrilled that conditions are the way they are! Not because I’m making a fortune dealing in short-sales, REO’s, pre-foreclosures, or discounted paper … there are loads of people raking it in working these niches, but I’ve decided to opt out of the terrific opportunities of misfortune … to focus on what it is that does cause me to jump out of bed in the morning.

Years back when I was a Real Estate agent, I was making what most would consider to be a terrific living listing and selling homes … working for commissions only. My coach and mentor would constantly be telling me -

“Jerry, you’ve got to figure out what would cause you to jump out of bed in the morning … and DO more of that!”

Well, that set up quite a bit of conflict within me, as I loved the money I was making representing buyers and sellers, but I wasn’t thrilled with the actual process involved with getting to a paycheck.

I was also scared to death that it would all come to an end; that I’d be exposed as a phony and a fake. I sometimes felt like “Do I really deserve all this money?!.” I thought I just might starve to death; that the dust of my bones would blow away in the Santa Ana winds!

Yeah, I’ve been accused of being a little “dramatic” before. OK, maybe a lot. No, definitely a lot.

But what was I going to do? I had to eat! If you could see me now, you’d realize that I managed to do more than my share of that! But my point is that my fear of the “what if’s” kept me doing something that didn’t really “do” it for me, at the expense of whatever it was out there that could make my heart sing.

My coach’s words played through my little mind often, and I just knew that there was something missing from my life … something that I could discover, implement, and then go joyfully skipping down the blissful path to peace, harmony, and prosperity … all while having a ball!

And that something showed up … and I did jump out of bed … and it was (felt?) glorious!

But I’m not going to tell you about it right now, because I’ve got to work on the “other” thing that floats my boat … and that’s way too much fun to put off much longer.

So I’ll see you next time … OK? Give me a week to get back to this, but in the meantime, consider this:

“We know what we are, but not what we may be.” - Shakespeare

And that’s probably true … in bed, or out.

Jerry Hannan

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I just received $10 through Paypal from a very generous woman in Monrovia:

“I am fifty years old with rapidly failing close vision. I too recently put my shirt on inside out. God bless you. I feel far less alone now.” - Cristina

You know, it’s great to be able to laugh at ourselves, isn’t it? When we take the walls and pretenses down, we create opportunities to touch and be touched, and we get a profound sense that we’re all in this together.

Thanks Cristina . . . and I don’t think we’re dysfunctional . . . I think we’re trend setters. Right side out is boring.

P.S. The Pasadena escrow I was able to help rescue with seller financing is closing today!

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My husband and I sold a home in 1994 using a land trust through a local Realtor. It was a smooth transaction that lasted 9 years. The buyer had a few credit dings and could not get financing approval because of alimony/child support issues. We took a chance and even extended the agreement 4 more years past the due date. Our buyer was never late on the the payments, not once. The transaction could not have been more perfect for either of us or the original buyer.

Currently, we live in Mission Viejo, CA and would like to try and sell our home again, using a land trust. However, we have been unable to locate a local Realtor who is familiar with equity/land trust financing. Can you suggest anyone we could contact?

Thanks for your help.

Kay

I’m glad that you have had a great experience with the equity holding land trust. The technique is definitely becoming highly relevant again.

It’s unfortunate that many real estate professionals do not embrace these creative exit strategies more aggressively. These days, you really need an agent that is well-versed in all types of seller financing. I’m sure I can help you locate someone in your area.

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Hope everything is going well for you. I was out yesterday educating Realtors at open houses on non traditional financing, ie Land Trusts. They all seem to recognize that things are different and were open to pursuing the EHLT approach. A couple questions came up and I thought I’d ask you your thoughts on them.

Q: Assuming a $1.2M MAV with an underlying $250,000 mortgage. RB comes in with lets say $100,000 and seller agrees to carry $1.1M at 6.5%. Would it be possible to take the difference between the remaining equity of $850,000 ($1.2M - $100,000 =$1.1M - $250,000 underlying) and divide it into two notes of $425,000 each at 6.5% and then sell one of the notes at some small discount (I don’t know how much it would have to be discounted) so the seller gets more cash up front? If you did it this way I assume that the new Note Holder would then have to be a beneficiary of the trust to secure his interest?? Can I mix Notes and Land Trusts in this manner or ???

A: Tough to mix seller carry back notes and land trusts . . . you need to choose one or the other. In the above situation, why put the thing in a trust if you can sell a 1st TD to pay off the underlying financing and create more cash at closing for the seller? Create a relatively small 1st (and sell it), and a large 2nd. Then the seller has:

• down payment
• mortgage paid off with a little extra to boot
• a stream of income from a 2nd deed of trust

It is very important that you put the deal together properly and underwrite the buyer so seller has optimal results when holding or selling the notes.

Q: Can we use a local escrow company to hold the funds, do a pre-liminary title search, and ultimately disburse the funds to the Trustee?

A: In my experience, it’s harder than you’d imagine to find an escrow company that is comfortable closing these types of transactions. They get hung up on the fact that there is no 1099 being issued at closing, among other things. Additionally, I like using an escrow that has processed many of these types of transactions . . . sometimes they catch things a less experienced company might miss.

Best wishes . . . looking forward to helping you put some of these transactions together.

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He has the sellers carry paper (take back a note, owner finance, etc.)

Seller financing won’t work for short sale or REO properties, but it will potentially work in all other transactions. If the seller has equity, good underlying financing, or some combination of the two, then a foreign buyer can come in and easily buy the property without the hassles and expense of obtaining traditional financing.

It can be such a win-win solution, and I’m seeing more of these all the time. Every day I get emails from people all over the country that are exploring the idea of offering seller financing so they can sell their home for a decent price in today’s market. Because most of these sellers already have some sort of financing in place, many times we’re using the land trust system.

But it’s not always necessary. Sometimes a wrap (AITD) or simultaneous sale of a real estate note will do the trick. For help in putting your seller financing deal together, email me for a quick consultation!

Canadians . . . quit worrying about the difficulties and expense of traditional financing! Seller financing can be the perfect tool for foreign buyers in today’s market.

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Yes . . . the proverbial, mysterious, vengeful, ever-looming, life-throttling, hatchet-in-the-skull, grave-digging due-on-sale clause is definitely a spook many people find threatening. It’s a (Santa) Clause that could turn into a Nightmare Before Christmas for people trying to put deals together with creative seller financing techniques: subject-to, wrap, etc.

I’ve always proposed that there is a relatively small likelihood of a bank calling a loan these days. It just doesn’t make sense for them to foreclose on a performing asset. Aren’t they busy enough foreclosing on properties where they aren’t receiving the payments???

And that’s when I started having some doubts . . .

Since when does common sense have anything to do with how a bank does business these days? They routinely refuse short sales so they can sell for 50% less as an REO down the road. Yup . . . prescribing the lenders with qualities they do not possess (such as common sense) is probably not a great idea.

What if they desperately need to beef up their reserve requirements one month? Might they go digging for loans they can call in to restore some liquidity? I do know people who have had this happen to them.

So, while I still maintain that there is a relatively small chance that a bank will call a loan in today’s climate, if it’s absolutely crucial to the deal that the existing financing be left in place, then I suggest you use a different vehicle for structuring your transaction: the Equity Holding Trust Transfer System.

Brief comedic interlude:

Now, back to our original programming . . .

As scary as the due on sale clause can be, I have to say that there’s something MUCH MORE THREATENING out there!!!

I get a lot more scared looking at the grocery bill needed to sustain four teenagers . . . they’re like locusts. You think you have a field full of grain, or a refrigerator full of food, and whoosh!! They come through in swarms and decimate the food supply.

So, please be very very careful how many of these you will let live in your house, especially with the upward price pressure on commodities these days.

• Why not stay tuned for more of these inspiring posts?
• Read about some frequently asked questions regarding seller financing

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I had a question for you to see how you might have handled something. My sister in laws’ boss is gong to be selling his condo here in Hawaii (he lives in LA). I told her about the land trust and she thought he might be interested in it and maybe I could list his house using that approach.

I wrote him an email and gave him an overview of how owner financing, if done properly, might allow him to sell his home more easily in the current market (he wants to list at $1.8 and owes about $800,000). He feels he needs the cash out of the house and has a Realtor friend that he has known for a number of years (knowing the Realtor, it will go on the market overpriced and then slowly be reduced to a realistic level).

How would you have countered his argument that he has a “friend” that is a Realtor. He would have been a perfect OWC type transaction, and knowing his property and its location, he is going to have a hard time selling it even at a reduced price. Thank you for any thoughts you might have.”

Dear Creative Realtor From the Islands,

Putting it in the land trust (offering seller financing) doesn’t mean the seller won’t get all or most of his equity out at close. It’s not hard for me to imagine that a buyer could have a 50% or more down payment and be happy to take over the existing payments (provided that the underlying financing is good). Good jumbos are hard to come by these days.

Sellers that list high and chase the market down always end up losing more money, but it can be hard to help them understand that. Advertising OWC, even if he decides not to carry, will always get him more interest, more offers, and a higher price.

And he needs to use a Realtor, like you, that has a thorough knowledge of seller financing strategies. Most agents just don’t have a working knowledge of the subject and can really do a disservice to their clients by not bringing in a seller financing specialist. Don’t worry, as the weeks stack up, there will be more and more mainstream recognition of the need for creative strategies, then you should be positioned well.

Let him languish on the market for a few months, and then revisit the conversation. Things change!

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