Is Your Note Buyer Right For You?

Abby Shemesh
June 24, 2016

house in the nature

If selling your home is a huge financial decision, then so is selling a mortgage note that reflects that property’s value. This is why it’s important to choose a mortgage note buyer with the same, careful approach that you would take when selling your home to a private individual.

Just as some homebuyers aren’t the best candidates to purchase your home, not every mortgage note buyer is a good candidate to acquire your mortgage note, either. Due to the unique challenges that buying and selling real estate notes pose, it’s important to consider four important criteria for deciding what’s best for your future.

  1. Reputation of Note Buyer

Every mortgage note buyer was once new to the business, but choosing a buyer that has at least three years of experience in buying mortgage notes is a good idea. Going with a seasoned buyer gives you more leverage to judge whether the company practices professionalism and respects the needs of customers. How can you be sure a mortgage note buyer has a commendable reputation? There are at least three ways.

First, if the buyer is a member of the Better Business Bureau (BBB), check its record at the BBB. In addition to viewing the company’s letter grade, read its file to see if there are unresolved customer complaints. Second, ask for an extensive list of customer references, and solicit their impression of the buyer’s customer service. Third, use the buyer’s name to perform a Google search to see if the company has any unwanted press due to questionable business practices that have been called out.      

     wooden house

  1. Fair Market Value Offers

The fair market value of a mortgage note is determined by several factors, notably: current trends in the mortgage note market, the location of the property to which the note applies, the payment history on the note, current interest rates, length of mortgage (the shorter the payoff period, the better the sale price), and property type (Residential mortgage note buyers tend to be more interested in single family properties than multi-family properties, for example).

Knowledge is power, as the old saying goes, but knowing what impacts the fair market value of a mortgage note and ensuring that you receive a fair offer are different things. To ensure that you get the best deal, you can hire a real estate attorney or a mortgage broker to oversee the transaction. If this isn’t an option, receiving and comparing three to six offers for your note should give you a good idea of its fair market value.  

summer house

  1. No Hidden Transaction Fees

Before you sign a contract to sell your note, ask the mortgage note buyer for a full disclosure of all fees associated with the transaction. Selling a mortgage note is similar to selling a home in that hidden fees can change the stated sale price by thousands of dollars. In addition to asking for a full disclosure of fees, ask for an explanation of any fees that you don’t understand, or an explanation for fees that you that you feel are too high. It may be wise to locate a direct note buyer in order identify if you will avoid fees and closing costs, altogether. Some middle men or “note brokers” may charge anywhere between $2,500 and $10,000 in commissions in order to fund a loan. This will mostl likely occur with no legal commitment or representing to the note seller due to little or no regulation.      

  1. Non-Recourse Transaction

Whether you sell your mortgage note in part or in full, the sale should be structured as a non-recourse transaction, which means that you aren’t responsible for the performance of the note after it — or a portion of it — is liquidated to the buyer. Seasoned note buyers are experts at evaluating the present and prospective value of mortgage notes, and should have no reservation about offering non-recourse transactions for the notes they purchase.    

Need a Mortgage Note Buyer?

If so, Amerinote Xchange would like to hear from you. We have a well-earned reputation as a mortgage note buyer that pays fair market value, doesn’t hit customers with hidden fees, and structures mortgage note buyouts as non-recourse transactions that allow sellers the peace of mind to use the sale proceeds as they please, starting the moment the transaction is complete.

To receive a free evaluation of your mortgage note, please call us today at (800) 698-3650, or use the contact form on our website. We look forward to examining your note and making you a highly competitive offer if the note is a good fit for our portfolio. Contact us today!