What Discount Will I Take if I Sell My Note, and Does it Need to Be Seasoned?
January 5th, 2012 categories: Selling Your Note, The Note Business
This recent email represents fairly common questions that people have when they start thinking about selling a note they now have, or may soon carry back, or who newly stumble upon “the note business”:
Dear Purchasers of Notes/Mtgs.,
1. Does it have to be seasoned? If yes, for how long or how many payments?
Usually some, but not always. It greatly depends on the other factors in the transaction, and whether you’re trying to sell a full, or simply a partial. I occasionally buy notes without any seasoning, while on the other extreme I may need to see 24+ months of seasoning before considering any type of purchase.
2. Do you have minimums and maximums on the dollar value of the note/mtg.?
No.
3. What type of discounts are required and how do they work?
Once in a very rare while, I can pay as much as .90 cents on the dollar, most are in the .60 - .75 range, with some I wouldn’t pay a penny for. There is no standard discount. It all depends on the variety of unique circumstances attending each transaction. The overall discount will be minimized if you choose to only sell a partial, and keep the tail end of the note for yourself.
4. What is the process if I have a note to sell?
Send me the note and security instrument (mortgage or deed of trust) and let’s have a brief phone chat. A brief overview of the transaction is also extremely relevant:
- Type of property securing the note
- Location of the property securing the note
- How long you owned the property before selling it
- Sale date
- Sale price
- Amount of down payment
- Credit score of buyer/payor
I’m guessing you’re asking about this because in your real estate investing business, you may need or want to use owner financing (with the subsequent sale of the real estate note) for either acquisition or disposition strategies, or both? I can usually help structure these types of transactions for maximum financial benefit when I am brought in as a consultant before negotiations are finalized.
For professionals… real estate agents, new note brokers, or investor/rehabbers in the business of doing multiple deals, I provide limited email and phone support to members of Owner Financing Club. People who want in-depth coaching or consulting can arrange that as well.
At Owner Financing Club there are many training videos and some downloadable documents that will help you understand notes and more deeply answer many of the questions you have posed above. You may want to avail yourself of this affordable education (and support) as a way to increase the number of tools at your disposal for investing in real estate.
There is also a fairly new (and free) one-hour video that will help simplify much of this conversation for you: Why Notes, Why Now?
To your success,
Dawn
| Discussion: 1 Comment »
Why Notes, Why Now? Join me for a Webinar on Investing in Notes
October 31st, 2011 categories: Events, The Note Business
WATCH THE REPLAY BY CLICKING HERE
| Discussion: No Comments »
Showdown: Lease Option Queen (Wendy Patton) vs. Note Queen
October 12th, 2011 categories: Events, Seller Financing
I really haven’t been a fan of lease options for a variety of reasons, evidenced by the fact that I practically ignore them entirely in my book, “Seller Financing on Steroids”.
In my mind, there are more ways to be unpleasantly blindsided with lease options, than with regular ‘ol installment sales. But the odd thing is, lease options seem to be more accepted, and appear to be much more familiar to main street buyers and sellers, and the real estate professionals who serve them.
I am really looking forward to having Wendy Patton as the guest for the next monthly meeting of Owner Financing Club (Thursday, October 13, 2011). Besides the other things that will come up, I’m going to make sure we do lots of playing around with various scenarios… to ferret out why lease options might just be the best answer in certain situations, and how to minimize the inherent risks and liabilities.
Like me, Wendy is a licensed real estate broker, which means she is very concerned with doing things the right way… legally, ethically and intelligently. I am really looking forward to our chat, and plan to learn A LOT from her.
Also, click that picture right above…
If you are reading this post in your email inbox, please sign up for my new e-zine “Property and Paper” to receive weekly (every Wednesday) updates, articles and special offers that will help you understand how to navigate OWNER FINANCING AND NOTES to achieve a sense of Power and Possibility, whether you’re buying or selling property or paper.
The article in this morning’s Issue #1 was about Simultaneous Closings (simo’s, simultaneous note sales, table funding, etc.) I also have a Calculator Corner section that will help you learn to use a financial calculator.
And, I introduced two new classes that I am starting later this month:
Owner Financing for Realtors
Why Notes, Why Now… and How?
The best way to participate in these classes is to be a member of the community at Owner Financing Club, but if you just want to participate in the classes without joining the club, you have that option.
| Discussion: No Comments »
