Simultaneous Closing


A simultaneous closing is the name given to a trans-
action where a note is purchased at the same time
(simultaneously) the home is sold (at the closing
through the title company).
 
Here is an example:
Home seller is asking $100,000
Buyer has decent credit and has $10,000 for a down
payment, but a note buyer requires a loan to value
ratio of 80%.

This means that the note buyer only wants to buy this note
with a value of $80,000.  In this case, the seller may want
to take back a second position note for $10,000 to
make up the difference.
 
So, here is how this transaction would look:
Sale price of home = $100,000
Down payment from buyer = $10,000
Second position note from seller = $10,000
New note to be bought at closing = $80,000
 
The note buyer now has a new note for $80,000
that they can purchase.  Based on the buyer's credit,
which is unknown in this example, the following
suggested terms for the new note are:

Note value = $80,000
Interest rate = 10%
Term of note = 30 years with a 7 year balloon
Monthly payment = $702.06
A note buyer can purchase the note for
$72,162.

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Here is the bottom line for the home seller:

Home seller receives a lump sum of cash for
1) $72,162 minus a commission fee by Beneficial
Brokers, LLC (for example, let's say $2,000)
2) Down payment of $10,000 collected from buyer
3) Second position note of $10,000 created by
seller
Home seller receives
*$80,162 at closing plus a
note of $10,000 with interest and the home is
sold
quickly.
When this sales transaction is completely finished,
the home seller actually receives a total of $90,162
plus
**interest on the 2nd position note.
 
*($72,162 pay price from the note buyer minus
$2,000 commission fee by Beneficial Brokers, LLC)
plus $10,000 down payment from home buyer.
 
**The home seller usually charges a higher
interest rate than the current market rate so that
a favorable return on his or her investment can
be achieved.
 
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