How Do I Find a Note Buyer?

You can contact note-buying companies directly, use a broker who takes your note to several buyers, list it on an online note marketplace, or ask local professionals for an introduction. Which route you take matters less than finishing with more than one priced offer to compare.

Get your file ready before you look

Buyers price what they can see, and a complete file draws a firmer quote with fewer changes later, so start by pulling together the core of the documents you need to sell a note:

A copy of the note and the recorded mortgage, deed of trust or land contract.
The current balance, interest rate, monthly payment and number of payments left.
A record of payments received, with dates.
The property address, the original sale price and the down payment.
Anything a buyer will find anyway, such as past late payments or unpaid property taxes.

Give every buyer the same facts, including the awkward ones, because a quote based on a flattering summary gets revised once the buyer checks.

Going to buyers directly

Companies that buy private notes advertise online and by mail, and if your mortgage or deed of trust is recorded you may already have had letters from some. You contact one, send your details and receive that company’s price. There is no middle party, and there is also only one number, so a comparison means repeating the exercise with other companies.

Using a broker or a marketplace

A broker gathers your file once, presents it to a group of buyers and brings the offers back to you. The broker’s pay comes out of the transaction, so ask to see where it sits in the numbers.

Online note marketplaces let you post a note for investors to bid on, which can put it in front of a large number of buyers at once. The work is yours: preparing the listing, answering questions, judging bidders and negotiating terms. That is easier for a holder who has sold notes before than for someone doing it for the first time.

Asking for an introduction

Real estate attorneys, title companies, loan servicers and local investor groups deal with note buyers in the course of their work and may be able to name one. An introduction is a starting point, and the checks below still apply.

Questions for any buyer you find

What is your legal company name? Look it up in the state’s business register.
Are you the buyer or a broker? Either is acceptable as long as you know who funds the purchase.
What yield did you price my note at? A buyer who wants a higher one pays you less.
What could change the price before closing? Ask for the answer in writing.
Who closes the sale? A title company, escrow company or attorney should stand between your documents and the buyer’s money.
Do you charge anything before closing? Question any request for money ahead of it.

This is the short version of the questions to ask a note buyer. Treat an evasive answer about the company name, the closing agent or money before closing as one of the note buyer red flags.

Why one buyer is not enough

Buyers differ in the return they need, the property types they like and whether they will buy part of a note, so the same file draws different prices. With a single offer you cannot tell where it falls in that spread, which is the reasoning behind how many offers to get on your note.

Ask each buyer about a partial as well. A partial is the sale of a set number of payments, with the rest of the note returning to you. Only some buyers offer one, and for a holder who needs a fixed sum it can be the better deal.

One submission instead of several

Collecting quotes yourself is the first real work in selling a note: it means sending the same file out several times and chasing each reply. The alternative is to send us your note details once and let us take the file to buyers for you. Put the questions above to us as well.