Here’s your Cash Flow Business Tip of the Week

New seller carryback note creation may now be as high as 1 in 16 home sales! My advice is: do not squander this opportunity

Given that Scott Arpan of Advanced Seller Data Services cited in our teleconference last Thursday that NEW note creation (and this is just what actually shows in HIS data compilation) could top 110,000 this year (and he covers 1/2 of U.S. counties so he’s not seeing all of the new notes out there) AND given the fact that the National Association of Realtors cites a seasonally-adjusted annual rate of 4.48 million homes that will be sold this year (but, taking into account at least 30% of those NAR figures reflect distressed properties that don’t figure into new note creation, we’ll adjust that downward to about 3.13 million homes will be sold this year for our purposes)– meaning that 110,000 out of 3,000,000 would be 3.6% and that is a CONSERVATIVE figure because Scott is including only 1st position notes over $30,000 and he’s only seeing somewhere over half of all new notes.. so we can say with a large degree of confidence that AT LEAST 1 in 25 new home sales involve seller financing based on those numbers. That is phenomenal, but HOLD ON… the actual situation is better than that…

To explore this further, Scott’s data is solid and he taps records from 1600 counties, of which there are 3009 in the U.S. So, his proprietary data compilation methods show a definite pace of 110,000 NEW seller-financed notes this year but we can interpolate that to be a little over 1/2 of the actual amount, so let’s call that, conservatively, 180,000 new notes all told this year. So we take 180,000 out of 3,000,000 and that gives us 6% which is 1 in 16!

(There are probably well over 1 million 1st position notes that have been put into circulation since 2008 but let’s not forget all of the 2nd positions out there in addition to those.)

Given that industry expert Eddie Speed already had the numbers up to 1 in 50 seller-financed transactions to home sales as recently as 2009 (and that number was only 1 in 400 back in the 1990s), that would mean we’re climbing rapidly. Make that EXPONENTIALLY.

(And these are just real estate notes we’re talking about. Business notes and other cash flows aren’t even considered here and those are vast markets in and of themselves.. matter of fact, those markets are much LARGER)

So, whether you’re marketing directly to note holders (using a list) or marketing to referral sources or a combination of both, you can be confident that the business is there and will not run out anytime in the foreseeable future.

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