Different Ways to Sell a Note


Traditionally there are two ways to sell a note, depending on future interest in collecting payments. The more common and well-known type of sale is the full buyout program. Here, the entirety of the remaining note payments are transferred to the buyer for one lump sum of cash, exempting the seller from any responsibility in maintaining the note.

The second method of selling a note is known as a partial purchase. In a partial purchase transaction, the investor purchases a certain number of the payments on the note, taking the note over only until these payments are up. Once the purchased payments run out, the note holder can choose to sell more payments or to take back the note and continue collecting payments himself. This option is good for those who need a lump sum at the moment but still wish to receive future payments on the note. Additionally, the partial purchase option typically provides the seller with more cash (less of a discount) because there is less risk to the investor as they are only purchasing a portion of the note.

Regardless of which program is chosen, sellers need to follow similar steps. To receive a quote on your note, the following information must be submitted: property address, type of property, property sales price, down payment, balance currently owed to you, interest rate on balance owed to you, payment amount, if the loan is delinquent (and if so for how many months), if there is a balloon payment (and if so what is its due date), and if you owe any money on the property.

Additionally, one should expect to provide their name and contact information. One 5-10 minute phone consultation will normally provide enough information for investors to present several options. If the offer is accepted, sellers can typically expect payment within 20 business days of closing.