Owner Financing 101: Notebuying

WHY SELL YOUR NOTE? Several months ago a man called me. He received a letter from me about selling his note. He began the conversation by saying he would be crazy to sell his note because he was getting 7% when the bank would only give him 1%. Plus, his buyer was well known in town, ran a small and successful business, gave him a 15% down payment and has made every monthly payment on time. So, why in the world would he want to sell his note to me at a discount when he had such a great deal? He would be nuts, he told me. He finally took a breath and I had a chance to speak. I simply said “I understand and I agree.” He vented a little bit more, got it off his chest. I listened some more and we finally said good-bye. This conversation got me thinking about why people sell their notes. The bottom line reason is always the same – better use of the money. But the specific reason is always personal to the circumstance of the seller. So I reviewed several of my recently closed transactions. Here are the reasons the sellers gave me for wanting to exchange their monthly payments for cash: 1. Opportunity to buy an investment property 2. Buy a new home 3. Pay a big income tax bill 4. Pay off medical bills for a family member 5. Pay expenses for elderly parents in a Living Care facility 6. Change of life – selling a business, liquidating assets, etc. 7. Pay off mortgage on an investment property 8. Buy a new SUV When opportunity or crisis presents itself, and people need cash, they will examine their options to determine the best source of that cash. If they hold a note, they may have been compelled to carry back the note in order to complete the transaction. Carrying the note was not the 1st option. So, it becomes easier for the seller to liquidate this asset in order to get the cash needed, as long as the price offered solves the problem. My job is to align the needs of the seller with the realities of the marketplace, and help him move on with his life. —————————————- Denny Stanz, Note Broker, CA #01915404. (760) 245-5366, Email: Website:

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