If you need to raise cash quickly, a real estate mortgage note is a good option for you. You are not alone. Many property owners sell real estate notes when in need of cash. A real estate note is simply the loan document created when you financed the sale of your house or investment property to a buyer. The document could be referred to as a mortgage note, a land-contract, or contract-for-sale. The bottom line is that the buyer is making payments to you which gives you the opportunity to cash in at any point.
When selling mortgage notes, many people think you have to sell the whole note. That’s not true! You can sell the entire contract, or just a certain number of payments. It’s all up to you. Nothing changes for the buyer. The buyer’s terms and payments will stay the same. He/she will just be making those payments to somebody else instead.
How It Works
Selling real estate notes can be intimidating if you’ve never done it before. You may have many questions such as: You know you won’t get the full face value for your note, but will there be other fees you have to pay too? How do you know if the note buyer is reputable? What is a normal discount on a note?
Here are some general tips to consider when looking for a buyer for your note:
- No upfront fees. If the buyer asks, cross them off your list. Experienced and reputable note buyers will check the homebuyer’s credit (the person you financed the home to) and give you a quote without charging you.
- A few possible fees later. The note buyer has already figured their expenses before making the offer to buy your note, so there are only a few fees you may have to pay. Those fees could include paying for the title policy if there are problems with the title that prevent purchase. Second, if the property appraisal is lower than the sales price, you may have to pay for the appraisal. The note buyer should not charge you more than what they are being charged.
- Be sure that the note buyer gives you a written purchase agreement. The agreement should include the purchase price and any contingencies. If you don’t understand something, request clarification and get it in writing if needed!
- The note buyer should check the credit of your property buyer before a final offer. Some buyers can quote one price initially, and then lower it later based on additional factors. An ethical note buyer can still give you an initial quote, but can also tell you those additional factors that could cause the final offer to be different.
- It’s OK to get several quotes from different note buyers. Provide as much information as possible to all of them such as the type of property, sale price, payment amounts, current balance, etc. All should respond within a day or two.
- In addition to providing real estate focused information and products, Highway to Equity would love to send you a fast quote! Simply use this form.
- When you receive a quote you like, the note buyer will need additional information before closing the transaction. They’ll request you to provide copies of the Mortgage or Deed of Trust, the Note, the closing or Settlement Statement, and the Title Policy. If there is no recent appraisal, one will be ordered.
- Each note buyer could have a different underwriting process. Just ask to find out if typical processing times meet your needs. Normally, after you send the required documents and sign a purchase agreement, a note buyer can close in 2 to 3 weeks. Delays could occur due to title and appraisal requests.
Selling real estate notes is quick and easy when you work with a company that is focused on providing value with a win-win mentality like Highway to Equity. To see how we can help you, simply request an offer and we’d be happy to assist you!
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