Get Out of Your Seller Financing - Sell the Note

What if the only way you can sell a property in a market is via seller financing? Are you going to be stuck recieving payments until the buyer can cash you out. If they have bad credit, which most will, it is going to take a while for them to be able to refinance. Now what!!!?? Well you could sell the note to another investor. There are a lot of investors out there who will buy your seller financing. They will buy it for a discount. They will offer to buy it for less than its outstanding amount, so they can make a profit. so how can you make a profit and still sell your note. Normally you have a profit built into your deal right, essentially the difference between what you have into the property versus what you sold it for...right!!! If you know you are going to sell it with seller financing and then sell the note, you will need to keep in mind how much of a discount your note buyer might require, so make sure the deal makes sense when you structure it right from the beginning to make sure you can make a profit and leave enough meat on the bone for your note buyer. Here are some basic steps to selling your note.

The first step to selling real estate notes is to locate a buyer. Many sellers seek out real estate investors who specialize in buying real estate notes and land contracts. Working with investors who possess experience can expedite the process. The Internet is a good source for locating real estate investors who buy notes. Start by researching local real estate clubs or online investing groups.

Once a potential buyer is found, sellers will need to provide specific information about the mortgage note. Investors will need to know the face value of the note, along with the balance owed, interest rate, loan status, number of payments remaining, and the asking price.

Most investors will require a real estate appraisal to determine current market value. Sellers are typically responsible for this cost. In most cases, sellers can obtain a broker price opinion appraisal which can involve a drive-by inspection or internal inspection. Drive-by BPOs are usually adequate and can reduce the costs of property inspections.

Once both parties agree on the sale, sellers execute an Assignment of Mortgage to transfer property rights to the buyer and record the transfer through the court. In instances where partial mortgage notes are sold, sellers must also execute a Partial Purchase Agreement.

Partial sales are common when sellers are engaged in special financing agreements with a third party. This can include seller carry back trust deeds, lease purchase option agreements, or Subject to transactions. When partial notes are sold, the property rights revert back to the seller once contract terms are met.

Closing documents are required to complete the mortgage note sale. Closing can occur face-to-face or via mail. When closing takes place in person, sellers present original loan documents including the mortgage note, contract for deed, or deed of trust. When closing takes place via mail, original documents must be signed and notarized, and returned to both parties.

After closing documents are provided, investors remit payment to the seller. Payment can be submitted via electronic transfer or certified check. The process of selling a mortgage note can take a few weeks to several months.