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Financial Consultants Dover DE

The Seller Finance trap begins with a seller who is having trouble finding a buyer. Maybe the park’s vacancy is too high, maybe the location is too rural or in obvious decline. Whatever the cause, the seller can either sit on the park for an eternity, or find a creative way to attract a buyer. And what can be more attractive to a buyer than an easy to qualify, below market interest rate loan.

Mr. Dion L. Williams, CFP®
(302) 672-1445
270 Beiser Blvd
Dover, DE
Firm
Del-One Federal Credit Union

Data Provided by:
Mr. William Lawrence Corsino, CFP®
(800) 856-9412
55 Kings Hwy
Dover, DE
Firm
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Areas of Specialization
Asset Allocation, Banking, Comprehensive Financial Planning, Debt Management, Divorce Issues, Education Planning, General Financial Planning
Key Considerations
Average Net Worth: $1,000,001 - $5,000,000

Average Income: $100,001 - $250,000

Profession: Not Applicable

Data Provided by:
Mr. Jeffrey L. Gehrmann, CFP®
(302) 735-8272
139 S State St
Dover, DE
Firm
M&T Securities, Inc.

Data Provided by:
Mr. Jeffrey T Puglia, CFP®
(302) 265-2236
223A S Rehoboth Blvd Ste A
Milford, DE
Firm
Lpl Holdings, Inc
Areas of Specialization
Asset Allocation, Business Succession Planning, Comprehensive Financial Planning, Debt Management, Divorce Issues, Employee and Employer Plan Benefits, Estate Planning
Key Considerations
Average Net Worth: $500,001 - $1,000,000

Average Income: $50,001 - $100,000

Profession: Not Applicable

Data Provided by:
Wells Fargo - Dover Parkway Remote Mb
(302) 736-2941
137 S Bradford St
Dover, DE
Type
Motor Bank
Office Hours
Mon-Thu 09:00 AM-05:00 PM
Fri 09:00 AM-06:00 PM
Sat-Sun Closed

Mr. Michael B. Gast, CFP®
(302) 735-2092
121 South State Street
Dover, DE
Firm
M & T Bank

Data Provided by:
Mr. Christopher S. Hayes, CFP®
(302) 736-7728
55 Kings Hwy
Dover, DE
Firm
Merrill Lynch
Areas of Specialization
Asset Allocation, Charitable Giving, Comprehensive Financial Planning, Divorce Issues, Education Planning, Estate Planning, General Financial Planning

Data Provided by:
Mr. Stephen R Price, CFP®
(302) 659-6783
600 Jimmy Dr
Smyrna, DE
Firm
M&T Bank
Areas of Specialization
Banking

Data Provided by:
Citizens Bank - West Dover
(302) 734-0231
1399 Forest Avenue
Dover, DE
Type
Branch
Office Hours
Mon: 9AM-4PM
Tue: 9AM-4PM
Wed: 9AM-4PM
Thu: 9AM-4PM
Fri: 9AM-6PM
Sat: 9AM-12PM
Sun: na
Drive Up Hours
Mon: 8:30AM-5PM
Tue: 8:30AM-5PM
Wed: 8:30AM-5PM
Thu: 8:30AM-5PM
Fri: 8:30AM-6PM
Sat: 9AM-12PM
Sun: na

TD Bank
(302) 760-4790
1035 Forrest Avenue
Dover, DE
Type
Branch
Office Hours
Mon-Wed 8:30-5:00
Th-Fri 8:30-8:00
Sat 8:30-3:00
Sun 11:00-4:00
Drive Up Hours
Mon-Fri 7:30-8:00
Sat 7:30-6:00
Sun 11:00-4:00

Data Provided by:

Beware of the Seller Finance Trap

BEWARE OF THE SELLER FINANCE TRAP
Sat 08/15/09 08:48:07 pm
by Frank Rolfe

There are few things more attractive about the mobile home park business than seller financing. Non-recourse seller financing allows the buyer to escape the hassle and scrutiny of bank lending, while at the same time offering some degree of insurance against fraud (you have not yet paid the seller in full), the ability to give the park back and walk clean in the event of catastrophe, and often includes a below-market interest rate and longer loan term.  

That being said, there is a trap often used by sellers that is baited with seller financing, and it is important to always be aware of, and stay clear of, this danger. 

The trap begins with a seller who is having trouble finding a buyer. Maybe the park’s vacancy is too high, maybe the location is too rural or in obvious decline. Whatever the cause, the seller can either sit on the park for an eternity, or find a creative way to attract a buyer. And what can be more attractive to a buyer than an easy to qualify, below market interest rate loan. 

Of course, there’s nothing wrong with a below-interest rate seller note. But not when it is used as a trap. And many times, that’s exactly what is being set. 

You see, the seller knows that the park will never hold up to the scrutiny of a bank – the appraisal, the independent review of the numbers, even the negative logic of the loan officer. To keep you from finding out that the park is overpriced, Do the Search or in a bad neighborhood, or basically completely unable to be financed, the seller offers to carry the loan and cuts the bank out of the loop day one. That’s the first leg of the trap.

The second part of the trap is to bait the deal with a super low interest rate to make the park look like it is a profitable investment, even though it could never carry a regular bank debt load of the same size. If a park is a 4% cap, then what better way to disguise the poor performance than with a 2% interest rate on the mortgage? The seller is effectively cooking the books with the buyer’s blessing. When you accept a cash-on-cash return that is spiked by ridiculously low interest rates, then you may be getting into trouble.

The final part of the seller trap is to offer only a short loan term, maybe two to five years, and the below-market interest rate for only the first year or so. What this does is to put the buyer in a negative cash- flow situation almost immediately, and force the round of bank loan requests that normally end in nothing but rejection. Faced with the loan coming due, and no bank loan prospects, the buyer often gives the park back to the seller, less his 20% down payment. There are sellers out there who have sold the same park two or three times under this framework, garnering 60% of their purchase price in down payments, and still owning the park. 

So how do you avoid ...

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