Once you’ve decided to sell your mortgage note or trust deed, the next step is to find a trustworthy professional note buyer.

Here are some factors to consider when talking to prospective note buyers about your note.

7 Tips for Finding a Trustworthy Mortgage Note Buyer

We realize that it’s not always an easy decision to offer seller-financing on your home. Likewise, you may be equally uneasy about selling your note. Choosing the professional that can best meet your needs and expectations is paramount.

Here are seven factors to consider in your search for an experienced and trustworthy note buyer.

1. Longevity and Experience

Don’t hesitate to ask the prospective note buyer how long they’ve been in the industry. There is a learning curve in the note business, and your needs can best be served by someone who has developed their arsenal of note-buying strategies.

If they’re relatively new to the industry, ask about their experience with notes like yours. It is possible that an active note buyer can make up for longevity with focused experience.

2. Positive Recommendations and Reputation

Perform an internet search on the company and its owner(s), looking for evidence of any past unlawful or unethical behavior.

Search for reviews from past clients. Google Business, Facebook Business and LinkedIn can be good sources for this information.

Tip: Don’t let one bad review sour you on a company if the vast majority of reviews are positive. There’s always going to be someone who isn’t happy with the way things turned out (and have no problem venting their frustration on social media).

3. No Hidden Fees

Make sure that all fees and services are communicated clearly up front before committing to the note sale. Unfortunately, there are a handful of unscrupulous companies in the industry that boost their profits by springing unexpected charges on their sellers.

It’s true that there may be fees which you will be responsible for as the seller. Just be sure you’ve been clearly informed and have had the opportunity to see how these fees will impact your overall proceeds from the sale.

Transparency is the key to a seller’s peace of mind. Only work with note buyers that are up front about ‘who pays what” on closing day.

Never pay for a note appraisal. If the initial offer changes after due diligence is performed by underwriting, the note buyer should be able to give a reasonable explanation for the adjustment.

4. Performing versus Non-Performing Note Buyers

While some note buyers do trade in both performing (paying) and non-performing (not paying) notes, it’s still important to ask the question … “Do you purchase the type of note I’m selling?”

Be honest with the prospective note buyer about the note’s pay history. If you’ve got a stellar payer, then let them know this is a solid performing note. If the payer is slow to pay or hasn’t paid in a while, let them know this as well. All this information will come out eventually anyway.

Before getting too far into the process, make sure the note buyer has experience with the type of note you’re selling. It’s best not to try and sell a non-performing note to a seller that specialized only in performing notes.

Working with a note buyer who isn’t experienced in your type of note can waste everyone’s time and often leads to an inappropriate price quote or a last-minute failure to close the deal.

5. Considerate and Helpful

Be sure you’re dealing with note buyers that are considerate of your time and generally helpful in their responses.

You’re probably going to have a lot of questions to ask the prospective note buyer, especially if this is your first seller-financed note sale. Questions are good. You need to know what you’re getting into.

A trustworthy note buyer will answer your questions promptly and respectfully. If they don’t know the answer to a question, they will follow up later with a response. You should never feel like you’re inconveniencing the note buyer with your questions.

Here are a few factors to consider before agreeing to sell your note:

• Does the note buyer take the time to explain the entire note sale process?
• Have they outlined all the major indicators that contribute to the note’s fair market value?
• Are they easily accessible by phone or email?
• Do they present their company professionally (web site, social media, FAQ resources)?

6. Fair Market Value Offer

Understand that the initial offer you receive is often based on incomplete information. Note buyers will need to see the actual loan documents and peform underwriting to firm up the fair market value offer.

How will you know that the offer you’ve received is fair and accurate? With so many factors influencing a note’s value, it’s easy to get lost in the process.

If you need more evidence that the offer is fair before making your decision, here are a few options to consider:

• Hire a real estate attorney or financial advisor with note experience
• Obtain offers from multiple note buyers for comparison
• Research similar seller-financed notes and properties in your area

7. Pay Attention to Your Gut

There’s something to be said about having a “gut feeling” that you’ve found the right note buyer.

A great note buyer will help you to fully understand and be comfortable with the numbers and process. You won’t have that sleazy used car salesman feeling with the right person.

Finding a note buyer that has mastered the “people skills” required in the note industry assures that the transaction will stay on track and everyone will have a stress-free experience.

At the end of the day, finding a note buyer you can trust is the key to a successful note sale transaction.

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