Jeremiah

All sorts of people will sell their real estate notes now in order to come up with cash on the spot for dire emergency money needs. A real estate note is a collateralized mortgage or savings & loan paper that is generated when you or anyone who financed the selling of the particular home or investment properties in question. It can take the form of a mortgage note, loan note, land-lease paper, lien, or a bonafide ground-contract or contract-for-sale. The idea is there is an official agreement from a buyer of real estate to pay you a steady, often monthly stream of money (much like paying a mortgage on a house or rent) and instead of waiting years to get paid in full, you’re willing to take a lump sum of cash now to sell the cashflows to someone else.

You as the seller can choose to sell the whole mortgage note, a certain number of payments from the current amortized schedule of payments yet to be made left. The purchaser of your real estate will have the exact same terms and payments to fulfill. The only difference now is this individual buyer will have to send the payments to a different person, business, corporation, or entity.

Selling real estate notes can be a very difficult process to go through at first. You have to understand right away that you will NOT get full face value for your money note, but there will also be other service fees you are going to have to pay too. Also, can the buyer be trusted? Will they pay on time, if at all? What is a general discount rate on the mortgage note? These guidelines will help you answer these questions and more:

1. Never pay fees up front. Buyers will always do credit checks on you to see if you are legit. If they do they are trying to scam you.

2. The exception to fees are as follows: Buyers already know their monthly expenses beforehand. You might need to pay title policy transfer, if there are any issues with the title that is not allowing purchase to go through. And lastly, when and if the property appraises at a price that is fewer than the original selling price, you could have to pay the appraisal fees. The price you pay should be the cost of the appraisal however.

3. Make sure both sides agree tothe terms, conditions, payments, delivery, and interest rates. Ask questions about anything that is not crystal clear.

4. Note buyers are responsible for checking the credit worthiness of the property owner. Jerk buyers can scam you and rip you off by giving you one price, then lowering afterwards (called low balling), saying that hte property buyer’s credit is terrible. This trick is called “bait and switch” and it works like a charm in real estate notes market (so people use it often).

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