SELLING A
PRIVATELY HELD NOTE

sponsored by Frank Lamb and Associates
1-800-249-0496



Any person considering selling a real estate note, that is, one secured by a deed of trust or a balloon payment at the end of that time. Due to the type of note, the best offer for its purchase is $49,600. However, if the seller only needs to raise a relatively small amount of money, the next 36 payments can be sold for $15,118 and then, at the end of that 3-year period, the remaining $70,012.47 balance will revert to the present owner of the note. The seller could then keep the note, or sell it, or sell another part of it.



How would one go about selling a note?

a) Advertise.
An investor who responds will generally expect the seller to arrange for an appraisal, a title report, and a payor's credit report, in addition to the drafting and furnishing of documents necessary for the transfer.

b) Go to a real-estate broker.
This could work if the broker buys notes for his or her own account, but otherwise the broker will be unlikely to have connections to note buyers, and may charge a fee to place it with a note broker.

c) Go to a lawyer.
The attorney may consider buying the note, or may have acquaintances who buy them. Otherwise this situation is similar to that of the real estate broker.

d) Go to a mortgage broker.
Mortgage brokers obtain funds for buyers of, or the refinancing of, real estate. Usually they are not familiar with the structuring of note sales.

e) Call a note broker.
Preferably one that specializes in real estate notes. In some states, California for example, the Department of Real Estate states that note brokers must be licensed as real estate brokers if they arrange for the sale of notes that are secured by real property within that state. Note brokers have connections to investors and/or financial institutions that buy these notes, and are familiar with the necessary procedures.




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