You’ve finally sold that property using owner financing, but now realize that you would like to get some cash now for your real estate note. There are lots of people out there who say that they will buy your note, but how do you make sure that you dealing with someone who is honest, competent, and able to actually get to you the money that is promised?
A number of methods are available to you in increasing the chances of working with the right professional. While you, of course, need to use your best judgment and instincts, you should ask penetrating questions to more objectively gauge the person or company with whom you are talking. Here are some good questions for you to use in any situation where you want to discuss the selling of your real estate note:
How long has the person been in the business? If less than two years, you should move along to another company.
Is the person a pure broker or do they also buy some real estate notes for themselves? There is nothing wrong with being just a broker, but someone who has actually purchased notes themselves will generally be more knowledgeable.
Is the person a licensed real estate broker? Although most states don’t require a real estate broker’s license to buy or broker real estate notes, a person who is licensed is more likely to be competent and to understand the market and legal implications for you, even if they are licensed in a different state from where you live. You can validate whether they are licensed by going on to the appropriate state’s department of real estate website.
Does the person understand different approaches to buying note? For instance, a strong investor/broker will understand and be able to explain to you the differences between them buying a full note versus only buying some of the payments, and be able to explain the advantages and disadvantages of each.
Ask the person to explain the process to you and what could cause their price offer to change. There are some unscrupulous brokers who “bait and switch”, wherein they offer you a price upfront but then think of a reason later to lower their quote to you.
When you hear the responses to the above questions, listen carefully to whether their answers are consistent and sound candid. If you’re not sure, you may want to ask for a couple of references from past satisfied note sellers.
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Alan Noblitt is the owner of Seascape Capital Inc., which buys real estate note. He may be reached at (858) 672-4678 or toll-free at 1-800-634-4697. If you would like to learn more about notes and read informational articles, visit www.seascapecapital.com
FINDING A BUYER FOR YOUR NOTE