The Good, Bad, and Ugly Note Sellers

When dealing with a mortgage note seller, what is the most important element of the negotiation process? The amount of the discount? How long it takes to fund? The reputation / credibility of your company? At the end of the day, it is none of the items listed above. Sure, some people will say “price” but the fact of the matter is the value of the note (your bid) is a much smaller piece of the puzzle than people realize. First off, everyone wants 100 cents on the dollar…or more. How … [Read more...]

Do Some Investors Pay Par Pricing When Buying Mortgage Notes?

Recently we received a question in the Finding Cash Flow Notes training course related to “par pricing” or "discount" when buying mortgage notes. First off, here is the Note Broker Question… Hello and thank you two for all your help. My question is why would a note investor pay par for a note? I’ve been speaking with a person who helps their clients use OWC (Owner Will Carry). I was informed they are working with a note investor that is willing to buy a note for par. I don’t understand … [Read more...]

How Partials Reduce Note Discount When Selling Mortgages

Is the sticker shock just too much when discounting notes? It might be time to consider selling just some of the remaining payments. Note buyers have long used the partial purchase to reduce their exposure or investment risk, but it also has benefits for the seller. You see the time value of money makes payments due now more valuable than those further out in the future. The partial purchase takes advantage of this by letting the seller cash in the most valuable portion – the more … [Read more...]

Sell Mortgage Note to the Payer? What about Me?!

I will never forget the first time I was asked this question by a potential note seller. “Should I offer a discount to the payer before I try selling my note?” I was silent for what seemed like minutes. In reality, it was only a couple of seconds before I replied but during those seconds my mind was racing. Of course I was thinking... “If the note holder makes an offer to the payer; I may never get the deal. Matter of fact, the payer will probably even pay the seller more money than I can … [Read more...]

Will I Have to Sell My Note at a Discount?

The most common question among note sellers is also the one that most new note brokers hope never to hear. Although I cover numerous ways and specific scripts for answering this question in the Finding Cash Flow Notes Training, I want to address it here from a 30,000-foot level. When dealing with the note discount question, remember three important things… 1. “Discount” is not a bad word. Hey, in a perfect world the seller would get 100 cents on the dollars, the note buyer would make a … [Read more...]

Let’s Be Brutally Honest About Real Estate Notes

There is a difference between being honest and being brutally honest. For example, if I ask my wife if my new sweatshirt makes my gut look big, an honest answer might be “Kinda”. A brutally honest answer would be “No, your gut makes your gut look big.” As someone who has taken literally thousands of phone calls from note holders, I’ve always been honest, but I’ve never been brutally honest, until today. … [Read more...]

What is Time Value of Money?

  We’ve all heard the phrase “Time is Money”. But what does it really mean and why does it matter in the discounted note business?  Here’s the short and simple answer! Money today is worth more than money tomorrow due to its ability to earn interest.  The Time Value of Money concept puts a price on the amount of time an investor has to wait for an investment to mature. To illustrate, if someone offered you $50 cash today or … [Read more...]

What’s Your Discount?

How do you answer a note seller when they ask, “How much will you pay for my note?” The simplest answer to “What’s Your Discount?” would be “It depends!”  But what you say next is very important. Here’s how we like to answer the seller’s first pricing question. “How much we pay really depends on your note. Each transaction is unique so we look to 5 key factors for pricing.  These include the type of property, down payment or equity, the buyer’s credit, how long the buyer has been paying … [Read more...]

Avoid Three Costly Mistakes!

Would you rather have $97,000 to sell your $100,000 note or only $80,000?  The difference usually comes down to the big three. Here’s the three biggest mistakes note sellers make and how to avoid flushing money down the drain. … [Read more...]

Moneymaking Opportunities with Notes!

Whether a seller, investor, or note broker, there are many opportunities to make money with owner financed or seller carry back notes.  There is a lucrative secondary market for seller financed notes also known as the paper business. Here are a few of the most common ways people make money in the note business. Maximize Selling Profits A seller often takes back financing for a buyer to appeal to a larger group of buyers and maximize the sale price. A property seller may also elect to take … [Read more...]