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. Here then, is a list of the five most common questions I get from note holders. The first response is my “honest” answer – the second is my “brutally honest” answer.

[Editor’s Note:  Warning! Please secure your sense of humor before reading the brutally honest answer!]

Q: Why is the note discount so high?

Honest Answer: Well, I expect to realize a certain yield when I purchase a mortgage note. Based on your note’s LTV, the credit quality of your borrower, and the payment history, I require this amount of discount to get comfortable with my investment.

Brutally Honest Answer: First of all, I didn’t write this discount into the note, YOU DID. What were you thinking giving some deadbeat with a 507 credit score a 3% interest rate? Are you insane or just dimwitted? And did you waive the down payment so they could use that money to improve the property instead? Yes? OK, you just answered my previous question…

Q. How can your BPO possibly be right? Property values haven’t gone down where I live!

Honest Answer: Plain and simple, there are a lot of foreclosures nationwide. Our BPO agents must use recent comparable sales in the neighborhood. If the majority of sales have involved distressed properties at distressed prices, that’s going to be reflected in the value of the property you sold.

Brutally Honest Answer: Oddly enough, every person I speak to says the same thing! This must be a major media conspiracy, complete with the fabrication of a national housing meltdown. If we all agree that housing prices have dropped everywhere in America except where we live, then obviously housing prices haven’t dropped anywhere! Were it not for that pesky little thing called REALITY, we’d have just solved a big part of our nation’s economic problem!

Q: When can I get my money?

Honest Answer: Average closing time is usually around 30 days, depending upon the time it takes for a title update and a property valuation. This assumes all your documentation is in order and that we receive it quickly.

Brutally Honest Answer: That depends. Are you going to continue shopping this deal to brokers who will bring it back to me for pricing next week? Even though you say you know right where the original note is, are you going to call me the day before funding and tell me it’s lost? Are you going to drag your feet getting me all the documentation I need to underwrite the file? I’m not a door – don’t try to trial-close me.

Q: Why does my borrower’s credit matter? They’ve always paid me on time!

Honest Answer: We want to be sure they have the willingness and the ability to continue making payments after we buy the note. If they are laden with debt or have fallen into delinquency recently on their credit cards or car loans, we can reasonably ascertain they may soon have difficulty making their mortgage payment.

Brutally Honest Answer: We’re not in the business of making your deadbeat borrower problem our deadbeat borrower problem. Would you buy a car without test-driving it or even seeing it? Would you wire money to a Nigerian prince because he seems like a good guy that’s down on his luck? Then why would you sell and finance your property to someone without knowing anything about their fiscal responsibility? Are you insane or just dimwitted? Sorry, I forgot we’d already determined the answer to that question.

Q: Why should I work with you instead of one of your competitors?

Honest Answer: We have the experience, professionalism, and efficiency you would expect when discussing the sale of one of your most valuable assets, your note. We can provide references from other satisfied customers, and though we do not expect to be given your trust at the onset of this process, we will certainly earn it throughout it.

Brutally Honest Answer: Not only are we nicer, more compassionate, and smarter than our competition, we’re way better looking.

About the Author: Clint Hinman is the President of Proficient Note Buyers LLC, a buyer and broker of non-performing notes/loans and REO. With over 17 years of experience in real estate-related cash flows, Clint is part investor, part broker, part consultant, and part plain nuts. Contact him at clint@pronotebuyers.com or visit his website at www.pronotebuyers.com.


  1. I am very interested in learning negotiation strategies and how to speak to note sellers.

    • Hello Rivkah,

      We encourage you to read our free articles on tips for working with people wanting to sell mortgage notes. You might also find the Scripts and Tips helpful from the bookstore.

      To Your Success,

      Tracy Z. Rewey

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