Selling Mortgage Notes? Find the Right Note Buyer!

Note Investors fall into one of four groups, but which one is right for you? Safe to say it’s not “The Posers!”

Here’s a look at each group including tips for finding and selecting the best note buyer.

Read more

5 Owner Financing Tips for Sellers

It’s a tough time to sell a house.

In an effort to sell fast and stand out from the crowd, sellers are turning to the owner financed installment sale. By accepting payments over time from the buyer, the seller provides an alternative to bank financing. This attracts more buyers and helps the owner get attention in a market flooded by oversupply from foreclosures.

Of course sellers don’t want to jump from the frying pan into the fire by trading a house that won’t sell for a buyer that won’t pay.

Here are 5 safety tips for sellers considering an owner carry contract:

Tip #1 – Review the Buyer’s Credit

How buyers have paid bills in the past is a good indicator of how timely they will make future payments. Always review the buyer’s credit prior to accepting a promise to pay. Sellers can obtain a signed authorization from the buyer to pull credit through a reporting agency, or the seller could simply ask the buyer to obtain a copy of his or her report for the seller’s review.

Tip #2 – Get a Down Payment

The more money a buyer puts down, the more “skin” they have in the deal. The greater this equity, the lower the likelihood the buyer will stop paying.

When people have little to no equity, they are more likely to default or just walk away from the home. Few sellers want the hassle of taking back a property through foreclosure, so increase the odds in your favor by requiring a down payment.

Tip #3 – Set the Terms

The terms include interest rate, payment amount, frequency, and the due date for payment in full. There are also late fees, default clauses, requirements for insurance, and other standard provisions.

While the terms can be whatever the buyer and seller agree upon, it makes sense to set terms that are affordable to the buyer AND favorable to a note investor. This way a seller is more likely to own a note that is valuable to an investor in case they ever want to sell future payments for cash.

Tip #4 – Get Help with the Documents

In addition to putting the terms in writing, the documents evidence the lien. The obligation to pay (or IOU) usually takes the form of a promissory note, which is secured by an owner mortgage or trust deed recorded in the county records. A land contract or real estate contract are also used in some states. A qualified attorney or title company familiar with local laws should prepare the closing documents.

Tip #5 – Collect Payments Like a Pro

Tracking the payments, interest, and balance is often referred to as servicing the note. In addition to collecting payments, a servicer should verify the real estate taxes and insurance are kept current. The seller can perform servicing but it is a whole lot easier to hire a third party company to handle this process.

If you are looking for the complete system for safe owner financing be sure to read our how-to manual. It includes documents, examples, terms, credit reading tips, note investor criteria, and lessons learned from 20 years of real life experience.

Here is what one satisfied reader said:

“Your product is one of my go-to programs. I am glad you took the time to put it together. I think I paid more than 10x when it first came out and I think it was worth every penny!”  Greg G – Canyon Capital

Available today in our bookstore as an instant download for just $99.97

Article written and copyrighted by Tracy Z. Rewey at www.NoteInvestor.com.

Questions on Selling Mortgage Notes

Owner financing is on the rise with more sellers agreeing to accept payments from buyers. There are many reasons people agree to a carry-back real estate notes including:

• Quick sale of the property
• Monthly income from the note
• No hassles of bank financing
• More qualified buyers
• Property that is hard to sell or finance

Rather than waiting 20-30 years for payments, many sellers opt to sell future payments to a Note Buyer. Here are the seven most common questions we receive on selling mortgage notes and trust deeds.

Why Would I Sell My Mortgage Note?

Circumstances change and many sellers would prefer cash today rather than small payments that trickle in each month. Here are just a few reasons people have sold their note for cash:

• Retirement
• Taxes
• Investment Opportunity
• Expensive Medical Care
• Vacation
• College Tuition
• Unexpected Financial Changes
• Peace of Mind – no more worrying if the buyer is going to miss payments or having to foreclose
• Accounting headaches, IRS regulations, paperwork hassles, and the list goes on…

What Is A Note Appraisal?

A note appraisal reflects the current market value of your payments similar to what a real estate appraisal provides for real property. Frequently referred to as a “quote” it shows what your future payments are worth to an investor in cash dollars today. We recommend having it evaluated once a year as pricing may change based on market conditions.

How Do I Maintain the Value of My Note?

Many of the items that affect the value were determined at the time the property was sold. However, keeping good records of the payments received and requiring the buyer to provide annual proof of current taxes and property insurance will help maintain the value of your important asset.

Can I Sell Just Part Of My Promissory Note?

Investors can purchase all or part of the remaining payments. Selling part of the payments allows you to receive a lump sum of cash up front, then payments when the note reverts back to you.

To minimize the discount, many people elect to sell just enough payments to meet their cash needs today and keep some of the future payments as an investment or nest egg. Always ask for an option that meets your needs.

How Is The Value Determined?

The value of a note is affected by the down payment, interest rate, payment amount, length of repayment, buyer’s credit rating, and payment history. The type, condition, and value of the property also impact the value of your note.

The time value of money, which makes payments due now more valuable than payments due in 20 to 30 years, is also factored into the offer. Due to inflation, money in your pocket today is generally worth more now than later. All of these elements will be taken into consideration in determining the current value of your note.

How Will Selling My Note Affect The Payer?

The payer or buyer experiences no change in the way the payments are structured. The only change will be the address where the payments are mailed.

How Do I Get Started?

The first step is to obtain a quote from a note buyer. The investor will ask some questions on the property sale and terms of the promissory note. This can usually be done over the phone or by completing an online worksheet. The investor may also request copies of the documents relating to your transaction, such as:

• Promissory Note
• Mortgage (or a Trust Deed, or Land Contract in some states)
• Closing statement
• Buyer information
• Pay history and current balance
• Previous title insurance policy
• Current hazard insurance policy

The investor will provide an offer subject to the standard title, appraisal, and buyer’s credit review. Once the review is finished and the documents gathered the transaction is reading for closing.  This process typically takes 2-4 weeks.  If preferred, an attorney or title company can handle the exchange of funds for the original closing documents.

Grab your copy of the Note Buyer List today!

Owner Financing Made Easy For Sellers and Home Buyers

There is a new site connecting sellers and buyers that want to use owner financing. Note Investor caught up with Fernando Sanchez, founder, and asked him to share his vision.  He explains how his site can help homeowners that want to offer seller financing and take back a real estate note. Read more

Dodd-Frank Hijacks Owner Financing

Private property owners have been swept into the regulations of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act which was signed into law in July 2010. Owner financing will be regulated in Title XIV Section 1401(2) (E) Mortgage Loan Origination Standards. The law restricts private property owners who want to sell their own property using owner financing (installment sale). These are some of the consequences.

Homeowners die before Read more

Why Sell My Mortgage Note?

Owner financing seemed like a good idea at the time. Let the buyer make payments and get the property sold. After all the seller carry back is known for attracting purchasers and providing quick closings, without the hassles or fees of a conventional bank loan.

But circumstances change and many sellers would prefer a lump sum of cash today rather than monthly payments that trickle in over the next 10, 20, or 30 years.

If you are receiving payments on a mortgage, trust deed, or contract there are investors eager to purchase all or part of the future payments. Note buyers run ads and mail postcards leading many to wonder,

“Should I sell my mortgage note?”

Here’s a look at the top 5 reasons people sell mortgage notes:

1. Pay Bills

Reduce debt or pay expenses including medical bills, college tuition, credit card balances, and home repairs. Pay down a home loan or payoff an existing mortgage on the property sold.

2. Peace of Mind

Eliminate the hassles of paperwork, payment collections, and IRS reporting. No more monthly worries wondering if the buyer will:

• Make payments on time
• Take care of the property
• Pay taxes and insurance
• File bankruptcy, or
• Go into foreclosure

3. Make an Investment

Start a new business, fund an IRA or retirement account, buy another piece of real estate, or make a profitable investment.

4. Settle an Estate, Divorce, or Partnership

Distribute partial ownerships or settle disputes for notes involved with an estate, probate, dissolution of marriage, bankruptcy, partnership, or other entity.

5. Enjoy Life

Take a dream vacation, fulfill a passion, enjoy retirement or buy a new car, boat or RV.

Know Your Options When Selling Mortgage Notes

You don’t have to sell the entire cash flow. Depending on the goals, selling just a portion of the payments might be a preferred choice.

Investors are willing to purchase a certain amount of each payment (say $500 per month out of a $1,000 payment) or just some of the payments (say the next 5 years out of the remaining 30).

Known as a partial purchase, this provides access to some of the cash now with interest and payments still accumulating for future use. It also helps minimize the discount since the payments due sooner are worth more to an investor.

Selling a note is not the right answer for everyone. There’s a potential loss of interest income and tax benefits. Some high-risk notes just won’t be marketable for a price that makes sense.

However, it pays to know your options. Most investors are willing to provide a no cost no obligation quote for review with a CPA or attorney to help find the best solution for your personal situation.

Wondering how to reduce the discount and sell your mortgage or trust deed for top dollar pricing?  Be sure to grab your copy of 21 Insider Secrets You Must Know Before Selling an Owner Financed Note, provided as a free bonus with any purchase of the Note Buyers Directory.

Note Buyers Love Payment Histories

Buying and selling mortgage notes is all about receiving those monthly payments.

Keeping accurate records will show how much the buyer still owes along with their payment habits.  Plus, it improves the value of the note to investors.  Read more

How to Sell Your Mortgage Note

Tired of receiving monthly payments?

Wishing for a lump sum of cash today?

If you sold property with seller financing chances are you’ve wondered about selling the real estate note. Here’s how to sell a mortgage note, trust deed, or contract in 7 easy steps.

Step #1 – Request Quote

Just complete a short informational worksheet to receive a free no obligation quote. This can be submitted online, by fax, or over the phone.

Click Here for a List of Note Buyers

Click Here to Download a Worksheet (PDF)

Step #2 – Provide Document Copies

To get started note buyers like to see copies of these three documents:

• Settlement Statement
• Promissory Note
• Mortgage, Trust Deed, or Contract

It is also a good time to be sure you know where the originals are located, especially the Promissory Note, as they will be requested at closing.

Step #3 – Accept Offer & Agreement

Once an offer is accepted it will be outlined in a written agreement. In addition to stating the price, the agreement will specify conditions of closing and who pays costs.

Step #4 – Note Buyer Review

The mortgage note buyer will perform a detailed review of the transaction, known as due diligence. This includes a review of the buyer’s credit, current tax and insurance status, payer interview, and other important items. They may also request copies of additional documents including a payment history, insurance policy, and existing title report.

Step #5 – Appraisal

The note investor will order an evaluation of the current property value. This usually takes the form of a BPO or drive-by appraisal. The investor wants to be sure the property value is still equal to or greater than the sales price. If the value comes in low, the note investor may present a revised offer for consideration.

Step #6 – Title Search

The title search verifies ownership of the property and the mortgage note. It saves time and money to work with any title report that might exist from the original sale date. If the title search shows money is still owed on a prior mortgage it will usually be paid from proceeds.

Step #7 – Closing

When all steps are complete the note buyer will send the final closing documents for signature. The title company is often used to handle the exchange of money for the original note and transfer documents. Funds are typically paid in the form of a wire transfer or cashier’s check. You are also encouraged to have your attorney review and advise with the closing process.

Selling your mortgage note can be a simple process when you work with an experienced note buyer. Just take a few minutes upfront to gather your information and documents and they will handle the rest for you!

Sometimes it is not only what you know, but who you know.

Knowing the right people can not only make things easier, in the case of the 2010 Directory of Owner Financed Note Buyers, it could also make you more money!

Gain access to our personal Rolodex of experienced note professionals that took years to develop.  Work direct with knowledgeable investors, educators, and master note brokers.

Foreclosures Create Owner Financing Demand

Over 2.8 million properties were slapped with foreclosure filings in 2009 – a staggering 120 percent increase in the past two years.

Discover why this bad mortgage crisis increases demand for seller financing and opportunity in the cash flow note business. Read more

Get Reliable Pricing When Selling a Mortgage Note!

Wondering whether to trust the pricing for the sell of a mortgage or land contract?

Here’s how to know if it’s a firm offer or just a soft quote when going to sell a private mortgage note. Read more

Next Page »