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A lot of people ask us, “What can I do to get the best price for my note and the best terms?”
The most important thing to do is make sure you have all the information available to the prospective buyer. The easier you make it for the buyer, the more quickly the can make a decision. Specifically, here is what you should have readily available:
- Promissory Note
- Deed of Trust/Mortgage
- Preliminary Title Report
- HUD 1 Closing State
- Payment History
- Title Insurance Policy
- Senior Encumbrance Information(If Applicable)
- Deed of Trust
- NOD (If Applicable)
- Payment History
- Property tax Statement
- Property Insurance Policy
- Phase 1 Report, If Available
- Phase II Report, If Available
- Appraisal (If Available)
- Broker Price Opinion (BPO) If Available
- Recent Payment Demand Letters to Borrower(If Applicable)
- Notice of Default (NOD) (If applicable)
- Notice of Trustee’s Sale (NOS) If Applicable
Additionally, the other key aspect of selling a note is knowing the market and what the market is willing to pay for a 1st or a 2nd. For performing notes, one of best ways to do this is to look at the yield. E.g. at the time of this writing, the expected yield on a performing 2nd with plenty of equity cushion is about 12.5%. So to figure out what you might sell it for, you could take your annual interest payments and divide them by .125 to determine a price. Obviously this changes depending on the deal, but there is no question that pricing your note right is key to attracting interested buyers.
Finally, respond to inquiries promptly. If someone has an interest, get back to them asap. You may also want to hire a professional handle the marketing and transaction process for you.
If you have been in the note business for a while, you know that sometimes getting deals done can be difficult due to the number of middle men between you and the buyer/seller. This creates a lot of inefficiency and slows down the process of getting deals done. NoteMarketPlace is not a middle man. Our goal is to make it as easy as possible for you to contact sellers directly. NoteMarketPlace is built on the principals of openness and transparency. We know that if we put you in direct contact with the seller of the note or the broker that has a written agreement to sell the note, you have a good chance of getting a deal done.
We also focus on helping sellers qualify leads. Sellers are looking for buyers that can show proof of funds and can close. If you are an investor and you see a note you like on the site, you can improve your chances of getting a response from the seller by demonstrating you can provide proof of funds in asked.
We believe the principals of a good market place are as follows:
- Minimum Friction Between the Buyer and Seller
- Full Disclosure (where legally possible) on the asset
- High Quality Listing Inventory
So far we have seen a lot of deal activity on the site. Great job everyone!
Take a look at this video to see how you can use NoteMarketPlace to post your notes for sale and find notes you’d like to buy.
We have had a lot of people ask us why we built NoteMarketPlace. There are many answers to this question, but in it’s simplest form, we feel that investing in notes is one of the best investments available today. The challenge is that this investment vehicle does not seem to get near the press or the traction of other vehicles. So, our goal is to make it easy for sellers and buyers to connect. Liquidity is important in a market place and NoteMarketPlace helps to provide this liquidity. Currently, sellers of notes tend to be hesitant to sell because the lack of liquidity forces them to take significant discounts. Conversely, buyers can’t seem to find much inventory for sale. Sure, you can invest in bonds and get liquidity..but the returns are low, and in most cases it’s hard to know the actual quality of the bond except to depend on rating agencies (and we all know where that got us).
The beauty of note investing is that you have control over the investment. If the borrower does not pay, there is recourse and provided you have a good understating of the collateral that secures the note, you can limit your risk. Granted, with this increased control comes responsibility and a requirement to understand the mechanics of the investment. In note investing you are not necessarily crammed into an investment with hundreds or thousands of other investors. If issues arise, you can work them out directly with the borrower. Most importantly, the returns can be very good. Everyone knows that today it’s a bit harder to get bank financing than it was some years back. This is providing more and more options to the private investor. We are excited about NoteMarketPlace and what this platform can deliver. Our goal is to make it as easy and user-friendly as possible. You can see how easy it is to add a note for sale here. NoteMarketPlace is designed to sellers, investors. Say for example, you sold your house and carried a note back, you can post it for free on NoteMarketPlace. We look forward to your success with the platform and don’t hesitate to let us know what you think and what features you’d like to see!