How Much Will You Pay For My Note?

If you buy or broker notes, you know pricing is the first thing sellers ask when looking to cash-out their payments from a seller carry back. Discover what sellers are really asking and the best way to answer the “What’s Your Discount” question.

It’s natural for sellers to want to know the amount of money they will receive to sell future payments on a contract or mortgage. After all, it is the need for cash that made them make the call in the first place.

But if you listen closely, you will realize they are asking something beyond just the bottom line number. Sellers want to know:

Will you pay me a competitive price?

Are you trying to take advantage of me?

Will you treat me fairly?

This means the answer needs to accomplish several things:

1. Reassure the seller;
2. Help the seller understand why pricing varies;
3. Establish a friendly yet professional relationship; and
4. Set the stage to obtain enough information to provide a quote.

Of course the simplest answer to:

“What’s Your Discount?”

would be

“It depends!”

But be careful – what you say next is very important. Here’s the standard script we use to both reassure and answer the seller’s 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, the buyer’s down payment and credit rating, how long the buyer has been paying you, and the terms of your note like interest and payment amount. An average note will demand 75 to 95 cents on the dollar depending on the items mentioned.

If you have a few minutes we can go over the details of your individual deal. This helps us calculate the accurate fair market value of your payments rather than just a ballpark estimate. This of course is at no cost or obligation to you. Do you have a few minutes now to answer some simple questions about the property you sold?”

We then take the time to ask them questions about the transaction to gather enough information to complete the intake form or quote request worksheet. If possible, we also obtain a copy of the note, mortgage (deed of trust, or contract), and settlement statement. We can then provide an accurate quote subject to standard due diligence.

However you decide to answer the discount question, just be sure to address the seller’s real underlying question, “Will you treat me fairly?”

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