Should you obtain multiple investor quotes when selling a note? There are two differing camps of opinion based of course on one’s perspective.
The note seller and broker marketing the note and requesting quotes want to know they are getting the best possible price. The investor, however, does not want to waste their time or money on a multitude of quotes they will never see as deals.
The “shotgun” approach, faxing a transaction to 8-20 investors on your speed dial, is highly discouraged by most investors. It gives the sender an unfavorable reputation and can sometimes drive a credit score down if a large number of investors are pulling a report. This in turn can pull the price down.
It also makes good sense to get your best deal knowing quotes can sometimes vary by thousands of dollars, especially depending on an investors’ preference. Having been on the selling and the buying end of many transactions, we recommend a reasonable balanced approach.
Start by matching the transaction with three investors believed to be well suited to the type of note based on your research of their parameters. Submit the quote request to these three targeted investors.
It can also be helpful to provide any known or existing credit information on the payer, avoiding additional inquiries at the onset. Exercise caution, being sure to comply with all aspects of the Fair Credit Reporting Act. Should the investor provide a quote relying on credit information provided, they will likely require their own credit report pull if and when their offer is formally accepted.
This helpful tip is from Personal Profit Series: Notes – Your Complete Money Making System to Buying, Referring, Creating and Holding Real Estate Notes and is available in the bookstore.