If you’re considering selling your mortgage note, you may be wondering how long the entire process takes. You may have also heard terms like simultaneous closing or concurrent closing. So what do these terms really mean?
What is Simultaneous Closing (SIMO)?
SIMO Meaning: A simultaneous closing (SIMO), often referred to as back-to-back closing, is a type of closing in real estate where two transactions occur at the same time. The first transaction is between the original home seller and the intermediary buyer, and the second is between the intermediary buyer and the end buyer.
In a SIMO, the intermediary buyer simultaneously purchases the property from the original seller and sells it to the end buyer. If the intermediary buyer is a mortgage note company, then the original seller will usually get paid in cash, while the buyer pays the intermediary buyer monthly installments until the full sum is paid off. This way, the buyer can take advantage of owner financing, while the seller gets the full sum right away. Both transactions happen at the same time, allowing the property title to pass from the original seller through the intermediary buyer to the end buyer seamlessly.
What is Double Closing in Real Estate?
Closely related to SIMO is the concept of double closing, often referred to as “double close transactional funding”. In a double closing, the same sequence of transactions occur as in a SIMO. However, there is a key difference.
In a double closing, the intermediary buyer (usually a real estate investor) actually funds and closes the first transaction before proceeding to the second. This process creates two separate sets of closing documents and is often used when the intermediary buyer does not want the original seller or end buyer to know they’re involved in both transactions.
What is the Difference Between Concurrent and Simultaneous Closing?
Is there a difference between concurrently vs simultaneously closing? While concurrent closing and simultaneous closing involve multiple transactions happening close together, they are different from each other.
In a simultaneous closing, only one property is being sold. If the intermediary buyer is a mortgage note purchaser, the seller will receive the full cash sum, and the buyer will make monthly payments to the mortgage note purchaser.
In contrast, a concurrent closing refers to two or more related real estate transactions scheduled to happen at the same time. This type of closing often occurs when a home seller is simultaneously selling their home and buying a new one.
In a concurrent closing, the sales agreement for both transactions will usually state that the closing of the buyer’s new home is contingent upon the successful sale of their current home. This arrangement means that if the sale of the existing home falls through for any reason, the purchase of the new home is also put on hold or canceled.
Concurrent closing allows for a seamless transition for the buyer between their old and new homes. It can be a good strategy for those who don’t wish to or can’t afford to have overlapping mortgage payments or need the proceeds from their home sale to fund their new purchase.
In both cases, careful coordination and communication among all parties involved and the title company are essential to ensure a smooth transaction.
Is Simultaneous Closing Still Viable?
Before the 2008 market crash, simultaneous closings and double escrow were frequently seen in the secondary mortgage market. However, the market crash led to erratic property valuations, and the risk associated with simultaneous closings became much higher. Since then, simultaneous closings in the mortgage note-buying space have drastically decreased. The general practice now requires a period of one to six months of loan payments (seasoning) before a loan can be sold off.
Partner With a Reputable Mortgage Note Buyer
Are you looking to unlock the equity in your mortgage note? Deciding to sell your mortgage note can be an important financial decision. It can help you unlock cash that’s otherwise tied up, allowing you to invest, pay debts, or finance new opportunities. It’s crucial to have a reliable, experienced partner who can guide you through the process smoothly and confidently.
The seasoned professionals at Amerinote Xchange understand that every note seller has unique needs and circumstances. As such, we are committed to delivering customized, client-centered solutions designed to help you realize your financial goals. If you’re considering selling a mortgage note, we would be happy to review your situation and discuss the best options available to you.
Having a seasoned mortgage buyer by your side can make all the difference. Reach out to Amerinote Xchange today, and let us guide you through the process of selling your mortgage note with ease and confidence.