How Are Notes Priced?

I want to sell my seller finance note.

How Are Notes Priced?What dictates the value of my note?

There is really no “ Rule of thumb” when pricing a note. Each note must be evaluated on its own merit and redeeming factors.

There are 6 main factors that drive the price when evaluating a note.

1) The Credit of the Buyer.
– This one Is self explanatory: Does the buyer pay their financial obligations as agreed?

2) The Collateral
– What kind of property is collateralizing the note?
– Where is the property?
– What is the condition of the property?

3) The Buyers Equity and the Loans LTV:
– How much equity is there between the fair market value of the collateral and the unpaid balance on the note?
– How much did the buyer put down when they purchased the property? (We call this “ skin in the game”)

4) The Terms of the Note:
– How long is the term of note?
- Is there a Balloon on the note? Can the borrower refinance the note when the balloon comes due?
-
What is the interest rate on the note?

5) Seasoning:
- How many payments have been made and have they been made as agreed?

6) The Paperwork
- Was the note created by an attorney that did all of the proper legal paperwork or was the note created on the hood of a pickup truck?

As you can see, there are many factors that go into pricing the value of your note. We need to be able to paint a picture of the history of the note as well as check on the current financial condition of the buyer to determine the risk of future payments.

For a free confidential quote on your note, CLICK HERE and fill out the form. We are not into high pressure sales and there is no obligation. We will just go over what options are available to you on the purchase of your note.

*Sign up for our FREE 3 part video series on “Investing in Notes”