How To Handle Note Transactions?

Dalbey Education, Note Network, Russ Dalbey

As a note finder, one of your critical tasks is to communicate the details of the cash flows offered for sale. In order to build relationships of trust and be successful, you always want to represent each deal accurately. Don’t neglect to ask all the right questions! You need to address all the issues potential buyers will want to know about before making a purchasing decision.

Here are some of the basics that you should cover on every potential note transaction. Even experienced experts can miss something, so I recommend using a checklist during your interviews with potential note sellers.

·         Get the details about the real estate. What kind of real property is the security for the note, and where is it located? Is it a single family residence (SFR), a condominium, townhouse, apartment, mobile home with land, or vacant lot? What was the sales price, and what is the current appraised value of the property?

·         Find out about the payer. What is the note payer’s credit score? If this information is not available, inquire about the payer’s previous payment performance (Have they ever been late or missed a payment? If so, how many?) and their employment history.

• Investigate the details on the payment stream. What was the amount of the down payment at the time of the note creation? Also, are there any special conditions, such as the note being in secondary position, having a variable interest rate, or having a balloon payment in the future?
• Ask questions to see how serious the note holder is about liquidating the note. What is the seller’s motivation to receive a cash settlement for their payments? If the note holder is ready to sell, they should have a firm dollar amount to which they will agree in mind. Find out what that price is!

Also, after you’ve collected all the facts and figures about the note at hand, use an inexpensive financial calculator (like a HP 10bII or TI BAII Plus) to check that the note’s original value, term, payment amount, interest rate, and remaining balance all check out. If the figures don’t add up, do some more research upfront before you start looking to match the seller with a buyer.

These are just some of the tips from the renowned founder of the Dalbey Education Institute: Russ Dalbey. At the Dalbey Education Institute there is lots to learn about the note network and how best to handle it. Visit the Dalbey Education Institute online!

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admin @ January 30, 2008