If you are a holding a real estate note, you may have thought about selling it. You may have wondered what benefits selling your note might bring, or when is a good time to sell your note, and how to actually go about selling your note.
Consider the benefits you may realize by selling your real estate note:
– You can pay off debt, especially the heavy debt that is charging you at a higher rate of interest than your note is earning. For instance, your home mortgage, car, recreational vehicle or credit cards.
– You may be able to increase the return you make on the sale by reinvesting the proceeds in other potentially high-performing investments.
-You will be free of concerns about the borrower defaulting on the loan or being foreclosed upon. You won’t have to continue to collect monthly payments or accommodate or pursue a borrower who is late in making payments, loses employment or is not able to meet the obligation for any reason.
-You will be free of concerns that taxes, insurance and other liens on the property are being paid. If your note does not place you in first position for pay-off this is an especially large concern.
-The substantial amount of liquid cash you receive from a note sale can be used for important future priorities. You won’t be wasting all those monthly payments you have been receiving. Smaller increments of regular cash-flow have a way of being handled like disposable income and evaporating into impulse purchases or non-essential expenses.
-When you have liquid cash you are in a much better position to handle emergencies of any nature.
-When you have liquid cash you are in a stronger negotiating position with regard to anything you may be purchasing.
-When you have liquid cash you can finally satisfy your dream of travel, education or other pursuits about which you are passionate.
-When you sell your note you will convert your long-term investment into an immediate source of cash.
When considering the timing of your note sale, it’s important to understand that the market value of your real estate note is related to current mainstream interest rates, but in a contrary way. As interest rates go down, the value of your note rises. The opposite is also true; if interest rates rise, the value of your note goes down. In the current climate of historically low interest rates, those considering selling their notes are in a very good position. If your best information sources indicate that future interest rates are more apt to go up than go down, converting your note to cash through a sale now is well-advised.
Selling your real estate note is a relatively simple process involving four general steps:
(1) The seller must first compile all the information regarding the note that a potential buyer would require in order to value and base an offer.
(2) Present your note “package” in an organized manner that makes it easy for potential buyers to evaluate the note.
(3) Negotiate viable offers. If you accept an offer, the buyer will want to confirm the current value of the property securing the note and the payment history of the grantee (payer) of the note. It’s possible further negotiation will take place if the the buyer determines this information does not match up with the package presented.
(4) Once an offer is finalized a closing is usually scheduled within a few weeks.
To receive a quote on the amount you may be offered for your note right now, answer the questions listed here:
