|
Sell Note - How to Sell Your Promissory Note-Real Estate-Business-Annuity-Structured Settlement First, the definition of a Promissory Note: (A promissory note is defined as 'A promise to pay a certain amount of dollars on a periodic or future lump sum, defined by the terms including conditions contained in the Note Document'. Usually, a Promissory Note is constructed during a tangible property sale event where the property seller 'takes back' a promise-to-pay (Promissory Note) instead of Cash.) Owning a promissory note, instead of requiring cash, sounded like a good idea at the time you sold your real estate or business or accepted your Structured Settlement because you will have a guaranteed steady stream of monthly payments at a reasonable interest rate. Right? Then, you soon found out that: 1. The interest rate you charged is now too low, 2. The payor pertaining to the note does not always make the payments on time so you have to call including demand the payments, 3. You have to pay taxes on the income 4. You figured out that the value of your note diminishes everyday, and, 5. You could put the lump sum pertaining to the note dollars to better or now-needed use. So, you decide to sell your promissory note. 1. First you went to your bank including they wouldn't buy it nor did they have any information regarding how to sell it. 2. Next, you asked your friends including 1 said 'Find a Note Broker'. So, you searched on the Internet including found a million web sites all purporting to be able to buy your note. You talked with a few but didn't obtain any satisfaction or few return calls. Now the frustration sets in. Here's how the Note Buying business works: 1. Notes are purchased by seasoned, reputable investors seeking long term returns on a particular investment using their own money. Investors might be individuals, groups, companies, pension funds or specialty funds. 2. A note is valued according to the long term yield to the investor. It’s named, ‘Time Value of Money’. Or, a dollar today is worth more than a dollar tomorrow. Therefore, your note might be purchased at a ‘discount’ or less than its current principal amount in order to provide the investor’s needed long-term-yield. 3. The note yield including value is de termined by the Note Interest Rate, the credit score pertaining to the note payor, the term pertaining to the note, the payment schedule, the Loan To Value Ratio (LTV), the payor's equity in the property, the security for the note including the 'terms' pertaining to the note. 4. Your note might be purchased by a particular investor based on his/her required note type, note criteria including required yield. 5. Note investors specialize in different types of notes. Some buy only 1st Deed of Trust Real Estate Notes or Mortgages, some buy only Business Notes or Annuities, etc.To make a long story short... you don't know if the user you are talking to is a Broker or a particular Investor or both or what note type, criteria including yield he/she requires. Frustrating. Now you think all note investors including brokers including the whole note buying industry is sleazy, unethical, unprofessional including worthless. Well, I'll admit that part of that is true for many unprofessional brokers but REAL Investors including REAL Brokers are here, honest, professional including provide a valuable service. How do you know? Just ask him or her if he/she is a Broker or Direct Investor, what types of notes they desire including what is their criteria including process. More on the in another article. This is what you need to know including do regarding your promissory note: a. The value of your note is determined by at the time including how you construct it. at the time constructing your note, assume you could need to sell it within the first year. If constructed properly including professionally, it could have high value. Professionally means using the services of a particular experienced Business or Real Estate attorney to construct your Note. Never use 1 pertaining to the simplified Note Forms available anywhere. Think regarding it... why do you think Real Estate Lenders use exquisite, complex, complete Loan Documents that are constructed for their own lending criteria? Next, Real Estate secured notes are valued on the appraised value or sale price pertaining to the property minus the payor equity including the credit worthiness pertaining to the payor. Business Notes are valued on the note payor credit worthiness including historic business performance. b. The highest valued notes are those that the current Note principal amount is not more than: i. 80% pertaining to the sales price pertaining to the Real Estate if it is a 1st Deed of Trust Note/Mortgage, or 20% if a 2nd Deed of Trust including the total of a 1st including 2nd doesn’t exceed 80% pertaining to the sales price or, ii. If a business note, 67% of business sale price. c. The payor (the person) responsible for the performance (payments) pertaining to the Note credit score must be above 640 (the national average credit score is 678) at the time you construct the Note (The lower the credit score, the less your note is worth). Always obtain a current Credit Report on the payor(s) before concluding a note transaction. You have the legal right (by virtue pertaining to the Federal Fair Credit Act) to request or obtain 1 because you are going to be their creditor. Go to www.transunion.com including click on Consumer Info to obtain a Tri-Merge credit report (it could provide you a payor score including report from each pertaining to the 3 credit reporting agencies). You could need the payor's full name, address, SS# including birth date. You do not need your payor’s approval to obtain their credit report because you are going to be the payor’s creditor. d. The Note payments should be monthly. e. The Note terms should be: i. For Real Estate Notes: 'Amortized Monthly, Payments in Arrears'. Or, Amortized Monthly, Payments in Arrears for 15-30 years with a full Balloon payment due in 5 years. Try not to accept a particular 'Interest Only, Full Balloon at the end' Terms. ii. For Business Notes: ‘Amortized Monthly, Payments in Arrears for absolutely no more than 5 years’. f. Your Note should carry a particular Interest Rate tied to Prime + 2%. Prime of the date is 8.25%. g. Your Business-Promissory-Note should have a Collateralized Personal Guarantee from the payor equal to the Original Principal Amount of your Note. the Collateral should be tangible, like Real Estate, that is owned by the payor outside the note transaction. h. The above are the basics. Your accomplished attorney should know how to construct your note correctly including know who we are so he might contact us at our web site for knowledge including instruction. Now, Selling your Note: 1. Your first goal is to receive a cash-purchase-quotation. Only Direct Investors might provide this. A broker could take your information, find a particular investor, obtain a quote then present you with that quote less his fee. Sometimes Brokers have investors that could pay you more cash then you might obtain other where. 2. Gather all the information regarding your note. You might find the note questions you have to have answers for at www.notefundingcenter.com/sellnote.html Here you just click on the ‘Type of Note’ including a Note information Worksheet displays asking all the questions needed to provide a cash-purchase-quotation. 3. Find a reputable Note Broker or Direct Investor. Search on the Net with keywords ‘sell note’, ‘note buyer’, ‘mortgage buyer’, ‘annuity buyer’. You could find us plus hundreds of others. Contact the ones you like including ask questions. 4. If you need to use a Broker, (a reputable Note Broker could request specific information regarding your note; he could package the information including contact us including other Note Buyers he has brokering agreements with). Some could broadcast your note to everyone on the Net. Broadcasting could devalue your note to almost $0.00. So, if you need to use a broker, ask him to provide you with the list of his contracted buyers he is sending it to including agree in writing that he only present your note to those you have agreed. 5. If you need to list your note for sale on the Internet yourself, there are many Note Listing sites where you might list your note including investors could find your note including contact you. 6. A Note Investor/Buyer like us , could request detailed information regarding your note before providing you with a cash-purchase-quotation. Logical, right? 7. You should receive numerous phone including email communications from your selected Broker or Investor prior to providing a cash-purchase-quotation. In our case, after 30 years in the business including 50% referral customers, we contact you within 1 day of your note information submission including explain the process, provide you a personal supervisor including ask any additional questions. Then, provide you a cash-purchase-quotation. 8. Your Note cash-purchase-quotation is usually a Net-Cash-To-You quotation. Sometimes it could be $XXXXX.XX with your provided Appraisal including Title. You should always know what your Net-Cash could be after selling including funding. Just ask. 9. After you accept the cash-purchase-quotation, a. You could be requested to agree to the note-purchase-quotation including provide certain note related agreements including documents. (You already have the majority pertaining to the documents.) b. The note-funding-processing-service could conduct ‘due diligence’ on the note, property, documents, credit including history. c. Assuming all the Note components pass the due diligence, your note could enter into “Transaction Processing including Funding” including you could receive your cash funds. Normally the process takes up to 30 days. Bottom Line: 1. Your Promissory Note is your serious financial asset. Treat it with respect. 2. Construct your note so that it is saleable at the highest possible Cash. 3. Have all the logical Note information readily available if you need to sell it for the most cash. See our web site for the information including documents needed. Or, email us with your questions. 4. Select a note buyer/investor/broker/listing service that you feel provides you the best service. 5. Inform your existing Note Payor that you intend to sell your Promissory Note of which he is the payor. He could have absolutely no negative effects. The only change he could experience is to whom he makes his existing payments. 6. Don't obtain caught up in the excitement pertaining to the deal. 7. Heed all the above.We are here to help you from beginning to end. Remember, we have been buying Notes for 30 years including respect that the is probably your first including only Note including a valued asset. notefundingcenter.com
|