Need Professional Advise From Note Buyers!
I visited a Note Buyers website where it was offered 96% of face value for a nonseasoned mortgage and simultaneous closing minus $3,000 (Broker Fee). They state the qualifications of the buyer, etc. and the property must appraise at face value.
Is this correct, or is this the old "bate and switch"? If this is misleading, then what would be accurate for an unseasoned, simultaneous closing on a SFR mortgage?
Can you supply more details? What is the face of the note? What are the terms of the note? Is this in connection with a SFR purchase? Are you paying broker fee? etc.
The property is a SFR that is currently for sale and I am considering the option of doing an owner finance. The price is $123,900 but appraises for $128,000. I may ask more for the property if I do an owner finance.
Also, I can use the note buyers guidelines to qualify the purchaser. I just need to know what is typical of the % of face value for a property in this range with 5% down?
I hope this is adequete info!
I think I understand your situation. I will paraphrase these so you can correct me where I am off point.
You are selling a house and the buyer is willing to put 5% down. You are carrying back the balance (95%) and wish to sell the note. This implies that the house is free and clear. If not, I assume that the buyer is getting some institutional financing (perhaps 80% LTV) and you are carrying back a second so that the buyer is putting down 5%.
The value of the note is likely to depend on the terms of the note and how much safety there is.
A note in first position will be more valuable than a second. The interest rate and length of the loan are critical. If the note is fully amortized over 30 years with a 3% interest rate will not fetch very much compared to an 8% note due in two years.
I suspect that what you found on the site may be close to their very best offer. What you might want to do is select several different term scenarios and run them by a few purchasers and see what they offer. This may help you in negotiating terms with your buyer.
I hope this helps.
Regards,
Ed
My suggestion would be to contact the potenteial buyers of the note and consult with them about how to structure the note for maximum value at the closing table.
I am a Commercial Mortgage Broker and Note Broker and the advice you have received thus far is accurate on all accounts. You should proceed with caution, get more than one quote, and you should definitely involve a note buyer up-front to help you structure the deal to your best advantage. If you get stuck, or you want a reliable note-buyer to work with, please contact me and I will point you to one of my sources.
Generally, if a person meets a note buyers criteria (the borrower), the should be qualified for a mortgage outright from an institutional lender. Most note buyers are lenders who are not licensed in your state, and generally are reselling the deal to the end investor. Your best bet is to send the buyer to a experienced mortgage broker (B/C) who has access to these programs. Worst case, the borrower will end up with the same deal that you are getting from the note buyer with less hassle.