Selling your mortgage note. How to Sell the note.

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Selling your mortgage note. How to Sell the note.

If you own a real estate Note and you’re interested in selling it, you first have to make buyers aware, but it is a good idea to be prepared before you start sending emails and making phone calls.

Here are a few things to keep in mind:

  1. Valuing the property. We, as note buyers, want to know the best value. Not the potential value…the best value. And while some properties can be hard to value, do not let that get in the way of being transparent. Disclose the challenges.

Here is another thing that is important to disclose – property damage. The only person who stands to suffer if a property with damages is overvalued is the seller. You! Most investors will sniff out damages and, if not disclosed, will kill the deal.

  • Know your taxes and liens. Most likely, if you are interested in selling your Note, you know if there are delinquent or sold/forfeited taxes. You may not WANT to know the reality that there is delinquent or sold/forfeited taxes, but…you know.

The things you may not know, however, are:
– If the sold/forfeited taxes are redeemable; and
– If there are prior unreleased mortgage liens or municipal, city, or tax liens that need to be released.

Our recommendation is to dig! Learn as much as possible about your property’s taxes and liens before approaching a buyer.

  • Get your pay history in order. One of the biggest factors in valuing a Note sale, from a buyer’s perspective, is pay history. We want to know upfront: has the borrower ever struggled to stay current?

NOTE: A sure-fire way to kill a deal is to make it difficult for the buyer to obtain evidence of pay history.

  • Get collateral in order. You need to be able to say whether there are any gaps in the assignment. You also need to have the Title Policy, a lost note affidavit (if there is one), and the recording of the mortgage or Deed of Trust.
  • Be prepared for the closing. You have dotted your I’s and crossed your T’s and you are ready to close with your buyer when you sell your note. Here are a few things to consider:
  • Have you set reasonable expectations regarding the timing of the closing?
  • Is an escrow closing required? If so, does that closing line up well with the Note sale closing?
  • Are there any challenges with the Mortgage Loan Purchase Agreement (MLPA)?
  • Does the buyer have any funding issues?

The last bullet point is a biggie. Do not hesitate to kindly confirm your understanding of the funding timeline…like, multiple times, if necessary.

Reputable firms like Dennis Love LLC have the funds ready to transfer; less-than-reputable firms may get into a deal without the necessary funds ready to roll. Listen carefully and trust your gut…if something does not feel right, speak up.

Get ready!

Dennis  Dahlberg

Level 4 Funding LLC
Broker/RI/CEO/MLO NMLS 1057378 | AZMB 0923961 | MLO 1057378
9133 W Plum Road | Peoria | AZ | 85383

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