I have an investment house I am preparing to sell, and I am considering offering seller financing...

If I sell my house on seller financing what type of discount is typical when I go to sell the note?


There are too many factors involved to give a "once price fits all scenarios" answer.

The price I can pay for your real estate note is determined by 13 factors.

1. What type of property did you sell?
2. When did you sell it?
3. What was the selling price of the real estate?
4. What was the down payment you received?
5. What city, state is the property located in?
6. How long did you own the property prior to selling it?
7. What is the current balance on the note you are selling?
8 . What is the interest rate?
9. What is the payment amount on your note?
10. Is there a maturity date or balloon payment date on the note?
11. Describe the payment history.
12 . Are the taxes and insurance on the property current?
13. Is the note payor’s credit good, bad or ugly?

People always want to know what there note is worth, now you have the information that is used in pricing your note.

Note Buyer, My note payor has bad credit...

Calling all note buyers...

I just talked to a note buyer and he asked me what the credit score of the payor on my note is.
How do I know? He makes his payment on time, that's all I care about.

What's the dealio with the credit score of the note payor?

Answer: Like everything else I have said in these related blog entries, credit score of the note payor is just 1 factor in the 13 factors that determine the value of your real estate note.

Obviously, the credit score (good or bad) doesn't tell you what the payment history will be on the note in the future.

Credit scores are just a value that the credit bureau's assign based on the creditors who have reported to them, based on an individuals past accounts...

Some note buyers place a great deal of emphasis on credit scores, other note buyers place very little weight on the payor's credit score.

Want to sell your note? Call me and we can talk about what I would pay to buy your note.

Note buyer. Calling all note buyers...

I have two notes for sale and I cannot get any note buyer to call me back.

One of the notes is my grandma's. The current remaining balance on it is $2,019.

The other note is one I found on the internet and the current balance on this one is $17 million.

I would like to sell my grandma's note and broker out the sale of the big one.

Why won't anyone call me back on these two notes? What's the deal?

A: The size of the note is another important factor in pricing your real estate note.

There are big notes, small notes and average notes.

The industry average note balance is $53,000.

Once the balance on a seller financed note gets below $10,000, most note buyers will not be interested because the balance is just too low.

Any note over $1,000,000 is usually just too big for any note buyer to take on.

Obviously, there is exceptions to every rule. But, you will have a tough time finding any note buyer that will be able to buy a note that big.

Regardless of the size of the note you are trying to sell, common manners tell me that you should at least get a phone call back. Thanks for your question.

Got a note you are looking to sell? Want a quote? Curious how I would price your real estate note? Simply give me a call: (206) 438-8399

Mortgage Note Buyers, I want to sell my note. Why does it matter what I sold the property for?

Question:
Which note would you rather buy and own -
A) A $50,000 note secured by a house that sold 3 years ago for $125,000.
B) A $50,000 note secured by a house that sold 3 years ago for 51,000.

Answer:
Equity. Equity. Equity.

Why does a real estate note buyer want to know what the property sold for?

It speaks to the equity or potential "equity cushion" that the payor has in the deal.

The more equity that the payor has in the deal, the less likely the payor will want to
default on the mortgage note.

For a note buyer, knowing the actual selling price paid for the real estate is an indication of the property value at the time of the real estate transaction. Certainly, the property may have fluctuated in value since the sale. But, it is a benchmark as to value at the time of the sale.

Real estate notes that have protective equity (the difference between the note balance and the selling price or current value of the property) are MUCH more valuable than notes that have little to no protective equity.

Again, selling price of the property is just 1 of 13 factors or variables that go into the pricing or determining the cash out value for your real estate note.

I am trying to sell my real estate contract. What can I do to sell it for the most money?

I get this question a lot.

Typical scenario:

For many different reasons someone sold a piece of real estate and decided
to "carry back" the financing for the buyer of the property
(could be a house, bare land, commercial building, whatever)

Initially, it's kinda fun to be receiving monthly payments from your buyer (also known as the borrower or payor).

But, at some point in this scenario, the note holder thinks, "these monthly payments are nice, but I can't really do what I want to do with these payments that trickle in every month. I need a bigger pot of dough."

Many real estate note holders eventually get to the point where they want to sell their real estate note.

Enter red phone funding the West's largest buyer of seller carried real estate notes.

People always assume or think they can "do something" to make their real estate note more valuable to a note buyer.

This unfortunately, is not the case.

Once your note is created between the property seller and the property buyer, their is very little that can be done to make the note "more valuable" to a potential note buyer.

The value of your note is going to be "set in stone" based on the terms and conditions that where negotiated between the note holder and the note payor way back to the time when the property was sold (at that time, the note was actually being formed and negotiated into existence between the property seller and the property buyer).

All this to say, be careful when you are selling your real estate property. The terms and facts and figures negotiated at the time of the sale of the real estate, will affect forever the marketability and desirability of the real estate note that you now carry.

We buy seller financed real estate notes. What does that mean?

Real estate notes are sometimes referred to as:
promissory notes
trust deeds
real estate contract
mortgage note
sales agreement
contract for deed
installment land agreement
etc.

The simple definition: If you sell real estate (house, land, commercial) and you
owner finance the buyer (which means you become the lender for the buyer) then this note that you have created, is what I like to buy.

I cannot buy every note. Some are simply not worth buying.

Some real estate notes might have poorly worded clauses in them.

Some notes have defaulted, bankrupt borrowers - which make it tougher to buy
the note.

Some notes are secured by real estate that doesn't make sense (like a landfill that
stores hazardous waste).

But, by and large, about 80% of the notes I see, I am able to at least make the note
holder an offer for their note. That doesn't mean my offer will be accepted.

Anyway, Hope this answers the question about what are real estate notes.