Every day people line up to sell the mortgage note they carried back from the sale of a home. Although some people keep the note for the entire term, usually, at some point, there comes a time to sell the note and receive a lump sum of cash.
Why Carry Back a Note?
Chances are you carried back a note because you had to.
Most people would have preferred a full cash offer (and payment) for their property, but life got in the way, and the buyers could not qualify for a loan.
Or maybe it was a sale to someone you knew or a friend of a friend. The note was created to expedite the sale process.
Perhaps you even thought it was a good idea. You receive both principal and interest on the note. In many cases, this is a great investment and certainly better than sticking the money in the bank.
Lastly, maybe it was the best way to get top dollar for your property.
Why Sell a Note?
Whatever the case, circumstances change. What was once a great idea is turning into a difficult situation for two reasons: Access and stress.
- No access to the lump sum of cash. The payers only need to pay you the amount of the agreement and no more. If you agreed to $900 a month for 30-years, chances are, that is all you are going to get. Our guess is that you have a better use for that money than waiting to collect it over time.
- There is also the stress of collecting payments. Will they pay on time? Will they pay at all? What happens if they stop paying?
In either case, it comes down to timing and is it the right time to sell your note?
There is some great news when it comes to selling your note.
For starters, it doesn’t cost you anything to find out what your note is worth. You can call, fax, or fill out an online submission to determine the value of your note.
There is no obligation and no cost. The more information you have, the better you can make the right decision if now is the time to sell.
Secondly, there are many options when it comes to selling a note.
For example, did you know that often you don’t need to sell the entire note?
This called a ‘Partial Purchase’ and it is a great way for you sell part of your note, but not the whole thing.
In short, you might have 120 payments left on your note.
You sell an investor the next 60 payments for a lump sum of cash.
The investor collects the next 60 payments.
After that, the note goes back to you! You can sell another 60 or keep the payment stream, whatever you choose.