Selling a Real Estate Note 101: Should I sell my note and what is the process?

There is a lot to consider when deciding to sell a real estate note (also called a mortgage note or promissory note). Last week we answered the question What is a mortgage note?. Here we take a look at some of the common reasons why people may want to sell mortgage notes and walk you through how to sell a note.

Should I sell my real estate note?

Let’s be honest- this is a personal question that only you can answer. What we can do is give you important information about selling a real estate note to assist you with making the best decision possible for you.

Some of the common reasons why people choose to sell a mortgage are:

  1. To receive a lump sum cash payment (often for the purpose of paying off unexpected expenses such as medical bills, tuition, or large purchases, or to make other investments or reinvest at a higher interest rate).
  2. To eliminate the burden of managing payments, insurance, and taxes.
  3. To simplify their estates for their heirs, or in the event of a divorce.
  4. Additionally, selling your mortgage note (or deed of trust note) frees you from worrying about default and foreclosure, bankruptcy of the payor, or the property becoming devalued.

How do I sell my mortgage note?

Once you have decided to sell your mortgage note, you can take the first steps in the process of
selling a note.

To save yourself time and frustration, we recommend that you start by gathering the paperwork and information you will need to provide to prospective note buyers. This will include: knowing the sales price, any lien information, current payment terms and type of payment, and a detailed description of the property. If selling a commercial note, you will also need: leasing information, zoning information, and the environmental history of the property. This will facilitate the process of getting a quote.

Next, you will want to find a mortgage note buyer. It is a good idea to contact several note buyers to establish a comfort level, ask questions and get mortgage note quotes. It is especially
important that you find a trusted note buyer whom you find to be a valuable resource and operates on a high level of honesty and integrity (which we will cover in more detail later in this series).

Every note buyer has their own process, but most should be able to quote you a purchase price and conditions of the sale within two business days or less. Remember, getting a quote does not obligate you to sell to that buyer.

If you are still feeling confused about whether selling your real estate note is right for you, please give us a call so we can answer your specific questions. Next week’s topic will be on how note buyers determine the worth of a note. As always, if you have additional information
to offer or general questions you think others might have as well, please enter them in the comments below and we will be happy to respond.

We hope to see you next week.

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