Why Choose Us for Selling your Mortage Notes?
If you have sold your commercial or residential property and you financed it yourself or as a client owner and now need to sell a mortgage note, Simanda Investments can provide a painless and sound exit strategy if acting as the bank is no longer enjoyable or profitable to you.
In as little as 15 days we can get you the financing for your mortgage note. You may not know it, but when you are selling mortgage notes on the secondary mortgage market, having the right funding source and direct real estate note buyers significantly increases the payout and the chances of hitting your financial goals. We have one of the fastest turnarounds and can get you cash fast from the most competitive offers on your mortgage notes.
Contact us today if you have a promissory mortgage note that you intend to put up for sale.
Options when selling a mortgage Note
There are multiple options available to you if you are looking to sell a mortgage note. These include:
Selling My Note with a Full Note Purchase
This is when you decide to sell your entire note and get the most money possible upfront (typically depends on what type of asset it is) to eliminate the risk or obligation to service the asset. This leaves you free to move on to other financial pursuits.
Sell A Partial Note of my note
This is when you purchase part of a note tied to a balloon payment or a payment stream (if any). For instance, we can buy 2, 3, or even fifteen years of payments expected from the asset. Once the company has collected all the payments as stipulated in the sale agreement, the remainder including the interest, principal, and remaining balance automatically revert to you. While you would get a smaller amount of compensation upfront, you would get much more due to the interest collected over the life of the loan.
Split Buy-Out of your mortgage note
This is when the entire purchase of your mortgage note is divided into 2 or more lump sum stages. You will often get a lump sum when the sale closes, and then scheduled payments at set future dates until all the monies are paid out. The reason for breaking up the note sale in this manner is usually related to the poor performance of the property market, securing the asset and the borrower. This could be advantageous if you are looking to reduce your tax liabilities in a given year.
Reverse Partial Purchase of your Promissory Note
This is when part of the note is bought, but the investor postpones collection of their interest to a later date. For instance, you could receive a lump sum after the sale and then continue to collect interest for a given amount of time. As such, you will receive both the lump sum from the close of the sale as well as the interest on the payments. However, upon a set date of maturity, the investor will start receiving payments on the asset. In rare instances, you could get back the note from the investor once they have collected a given amount of payments from the asset.
What is the market value of my Real Estate Note?
Determining the market value of a real estate receivable on the secondary market can be quite a complicated affair. There are several secondary as well as primary variables that influence what a real estate receivable is worth in the market. These include:
Down Payment Amount
This is a crucial variable that investors put at the top of their list when they are calculating the current value of a mortgage note that has been put up for sale. Not only is this a determinant of how much money you stand to get, but it also makes it possible to tell if your self-financed loan can be sold at all. The more money you can get in the form of a down payment when selling an asset and creating a promissory note, the more likely you will have more investors showing interest in the mortgage when you want to sell in future. The down payment is a determinant of the amount of equity you have in the property (Loan to Value), which is critical for the investor to determine how safe their investment is.
Borrower's Credit Score
his is a primary variable which will come into play 99% of the time when you are determining the price of a mortgage note. If the investor has a higher credit score, they stand a better chance of having their offer accepted. As such, it is critical to review the credit score of investors looking to buy your asset if you intend to sell a mortgage loan to an investor. Many sellers do not bother to check credit scores early only to find out years later that the investor's credit is so bad that the note is impossible to sell.
Loan Amortization and Terms
These are primary variables that are critical in determining the price of your asset when it finally goes to market. These usually include:
Promissory Note Interest Rate
An essential mechanism used to determine the amount of money one would get for the sale of a real estate note. The interest rates are related to the risk that the seller takes upon themselves by financing the asset. You will typically get higher lump sum payments when the asset is sold if the interest rate is higher.
Note Payback Period/Amortization
Another critical aspect that determines how much money you would get when selling an asset to an investor. The longer the repayment period, the less money you will get when selling your seller-financed loan. You get more money if the payback period is as short as possible. For instance, a 30 year payback period is terrible for note offers and is the last thing you should do if you intend to get the most money for your mortgage note. A 10 or 15 year repayment period with no balloon payments is, and you should try to get such a payback or amortization to make the most money from your asset.
for some investors, balloon payments are a good thing while some deem them too risky. It is recommended to avoid balloon payments if possible, given the new regulation such as the Dodd-Frank Wall Street Reform Act that has targeted balloon payments. You may have to hire the services of a State licensed mortgage originator if you intend to include a balloon payment. We have no issue with balloon payments since they have very little influence on the prices of mortgage notes that we buy.
These are typically a primary variable in the instance that the borrower is a corporation. Personal guarantees are only relevant if you are selling the asset to a corporation that is not listed on the stock exchange. If the corporation is a Trust, LP, LLC, C-Corp, or private S-Corp, you need to get a written personal guarantee from a ranking official of the company to ensure that you will get the agreed payments even if the corporation is no longer in a position to fulfill its obligations. If you do not obtain a personal guarantee when you sell the asset to a corporation borrower, you could find yourself getting significantly less money than the offer that was received. However, you will not need a personal guarantee if you are selling to a private individual.
Seasoning of Loan and Payment History
This is a primary variable. To get the most money from the sale of your mortgage loan, you need to have made at least 6-12 payments. We can still buy your loan if you have made less than six payment, but you will get significantly less for it. We recommend that you collect all payments via money order, direct deposit, or check. Always photocopy and keep records of all money orders and check if you do not intend to deposit them into your bank account. The payment history is critical to selling a loan given lack of equity and poor borrower credit. As such, it is always essential to make copies if you intend to become a real estate receivable lender.
Record Keeping of your notes
This a secondary variable that relates to mortgage documents. We always recommend that you keep your mortgage documents as safe as you would your cash. The documents, just like cash, are an IOU, and if you misplace or lose them, you might find it impossible to sell the note given that most states do not have such records in their databases. Mortgage documents are the same as the pink slip for your car. If you do not have the pink slip, it is impossible to change the ownership of them, making it impossible to sell. The same applies to your mortgage notes which need to be kept just as meticulously if you intend to sell them on the secondary market.
Closing the Property Sale Using a Title Company
This is a secondary variable. It is always recommended to hire an attorney or a title company to sell your property and create the mortgage note. This will ensure that your note is created using the proper protocol, particularly during the transfer of the asset to the borrower. The title company will take a title insurance policy so that you can have a clear title. The company will also tailor the language of the security instrument and promissory note to ensure it is compliant with the regulations of the State. We always recommend that you do not cut corners when preparing your notes to prevent poor loan sales. The title company will ensure that everything about your down payment is tallied correctly and entered into the Settlement Statement and the HUD-1 so that it can be proven that you collected the down payment money.
How to Sell A Mortgage Note
If you are a note seller, selling is a straightforward process. To make it easier for you, we have created a step by step process on how to buy a note. The guide also comes with a description and investor insights on the pricing of an asset that is under review before purchase. Of course, different investors will have differences in what they prefer, although the principal factors they look at are the same for most.
- Get a Quote
- Accept an Offer
- Submit a Copy of Land Contract, Deed, Mortgage or Note (depending on the State you live in)
- We will do collateral/asset verification to get estimates on property value, borrower credit, and to confirm notes LTV.
- Once we have the pre-confirmation for the asset, the note seller has to present the following documents so that they can be underwritten:
- HUD1 or Settlement Statement
- Copy of third Party Loan Servicing Agreement (where applicable)
- Proof of Payments Records (canceled checks, bank statements, etc.)
- Title Insurance Policy (makes sure the title does not have any encumbrances from the previous owner)
- Proof of Fire/Homeowners Insurance (should include policy number, number and agent name)
- Pictures of the property if available
- Rental Amount and Tenant Rental Agreement (if it is a commercial or rental property)
- Note seller reviews, signs and presents the mortgage authorization documents
- We will order and pay for an appraisal of the building's exterior
- Once we receive the note appraisal, we will approve it
- We will pay for a title search
- We will then take receipt of the title and confirm that it is clean
- We will then schedule the transaction, including the closing date and time by working with the attorney's office or the title company of your choice or through UPS or FedEx
- Receive wire transfer or check
The whole process should take between 15 to 35 days, depending on the availability of companies that provide title search services, the availability of local appraisers, and the property location/state. AX will foot all expenses associated with the purchase of the note, including title fees, BPO, and appraisal.
Does the right Real Estate Note Buyer increase your chances of success?
How can you know that you found the right buyer for your mortgage note?
There are several ways you can use to determine if you have found a professional and serious mortgage buyer that will offer a reasonable price for your note and treat you fairly. Here are some aspects to look out for:
- Professionalism – Does the buyer professionally conduct themselves? Would you trust their ability to help you get the financing you need when you are selling your mortgage note?
- Note Broker vs. Direct Note – Is the person or company you are dealing with a broker or direct note purchaser? Working with brokers is not necessarily wrong given that many of them are experts in their field. However, working with a direct buyer can be cheaper since depending on the note being sold, brokers can charge a minimum of $2,500 going as high as $10,000. Working with a direct buyer means you can always get the best offer. On the other hand, getting a good broker lessens the hassle of looking for a quote as they will do all the work for you. Nonetheless, many sellers prefer to work with a team with direct funding, such as what we have at Amerinote Xchange.
- Gut Feeling – Always trust your gut. Do you feel that the company knows their job? Are they well versed with what is going on in the industry? If something does not feel right, do not do business with them.
If you intend to sell notes, you are in the right place. We are a leading mortgage note buying company in the US with more than ten-year experience buying mortgage notes, and we will ensure that you get the most money possible for your note.
Simanda Investments LLC has been in operation in the discounted mortgage note industry and the secondary mortgage market for more than a twelve years, and during this time, we have maintained a 96% note closing success rate.
Our in-depth understanding and extensive experience in the secondary market makes us experts at exceeding client service and financial expectations as we will always get your note deal funded. The most important thing you are looking for is money though we believe that efficiency and effectiveness of service are also essential and hence we work hard to provide these.
What do Note Investors look for when buying Real Estate Notes?
Real estate note buyers have unique investment appetites which are determined by their risk tolerance. Promissory Note investors do not have a cast in stone purchase criteria when they come into the secondary mortgage market.
The factors that will be important for the investor will depend on whether they are buying non-performing or performing mortgage notes for their portfolio.
Most note buyers buying performing notes will be looking for:
- Equity/Down Payment
- Loan Structure
- Credit Score
Most note buyers buying non-performing notes will be looking for:
- Current Property Value
- Borrowers Last Payment Applied/Received
- Foreclosure Procedures that apply in the Given State
Noteholders need to know one crucial thing when they get into the mortgage note selling market – RISK. Every seller needs to keep in mind risk in the form of borrower default, non-payment, and any other type of risk. All mortgage note buyers will first look at the asset's equity or down payment to determine the risk.
The equity in the asset would be something the investors would be looking at to determine how sound an investment the loan would be. The loan will be worth less to a note buyer if it has a higher risk. In general, the note is worth less on the secondary market, the lesser the down payment collected. This is because of the high loan to value.
Just to be clear, anything between 0% to 9% is poor down payment, anything between 10% to 14% is a decent down payment, 15% to 20% is a reasonable down payment, 21% to 30% is a great down payment while anything above 31% is an excellent down payment.
Another critical factor the note buyer will be looking at is the credit score of the borrower from the Tri Merger of Experian Score, Trans Union Score, and Equifax Score.
An excellent credit score is anything above 780; a great score is anything between 720 and 780, a good score is between 676 and 720, a decent score is between 601 to 675, and a poor credit score is anything below 600.
Unlike most note buyers who will never take anything below 600, we will take a 500 FICO Middle Score. Once the credit factor is settled, the price of the note is variable among buyers.
Our note purchase criteria at AX include loan performance, loan seasoning (payments owed, payments received), relationship between the seller and borrower, RE market trends/property location, and loan payment records among others. Click here for a free quote and more information on the note buying process.
Selling a Note You Create has been easier
Thinking about selling a Private Mortgage Note and Owner Financing a Property Sale?
If you are yet to sell your property and are thinking of owner financing the asset sale, you can get the most money by creating a mortgage note and selling it to a mortgage investor.
It is a simple mortgage buying process, and you can create a seller-financed promissory note and finance the asset sale private without having to reduce the price. Once you have created the note, you can sell to AX on the secondary market and have a painless exit strategy so that you can move on to other financial pursuits.
You will only need to do a little bit of research and exercise some patience to get the best prices for your mortgage note. You have to keep in mind that there are many aspects to the transaction that needs to be confirmed and be in good order to ensure that favorable and smooth funding of your debt instrument.
With its years of experience in the industry, AX has several mortgage buying guidelines as well as insights into the overall landscape and pitfalls of the note investing sector. If you are interested in learning more click How to Create a Valuable Mortgage Note to Sell for Top-Dollar
The overall criteria we use to purchase mortgage notes is to buy mortgage notes whose balance is between $35,000 and $5,000,000. We operate and manage our note funding platform in house, and hence we do not need any outside authorization or approval to fund any mortgage note sale we are interested in.
In addition to mortgage note buying platforms, AX also has separate note funding platform for certain asset classes. These include residential non-performing loans, residential performing loans, commercial non-performing loans, commercial performing loans, and mobile home with bare land/land notes. We provide partial purchase buy out option, and full purchase buy out option.