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Tips On Selling Real Estate Notes
by Jagger Stone
Real estate transactions take place everyday in the United States and all over the world with most real estate transactions occurring between a bank or lending institution since the buyer needs to acquire financing in order to purchase the property.
This scenario is usually the norm, however there are transactions in the real estate market that take place between buyers and sellers with the seller acting as the bank or lending institution.
The seller in this case, is the person that owns the property already and is selling it to the buyer. The entire transaction takes place between the buyer and seller without any third parties being involved such as a bank or commercial lending institution.
The buyer and seller then form a contract where the buyer agrees to pay the seller in installments each month with the seller holding the note for the life of the agreement. With this transaction, the seller has a created a monthly income stream secured by the property.
If the buyer defaults on the agreement, the seller then takes the property back or forecloses on the buyer, just as a lending company or bank would do under the same circumstances.
The transactions outlined above is the same as with a bank or lending company with the only difference being that the seller holds the note rather than a commercial lending company. Often times, private citizens do these real estate transactions many times over with different properties creating multiple income streams secured by property.
As with anything, circumstance change over time and a note holder may find that he needs to free up substantial amounts of cash either for reasons of financial distress or for acquiring new properties. In these cases a note holder may search out avenues to sell one or all of his notes to another party for lump sums of cash.
Note brokers specialize in helping note holders find investors or people that buy real estate notes. These investors or companies will buy note from the note holder, usually at a discount, and provide the note holder with lump sum of cash for the note. The investor or company then acquires the income stream secured by the property and the former note holder receives cash for the income stream at a discount rather than receiving the cash in monthly installments over the life of the note.
The former note holder did not receive the full price of the note, but he did receive a lump sum of cash, albeit at a discount for less than the original price. The former note holder is now free to do with the cash as he desires, either acquiring new properties to create more income streams or utilize the cash for other reasons.
Selling real estate notes is not a complicated task. The only real requirement is research and finding a reputable note buyer or company that specializes in purchasing established income streams.
Some points to consider before entering into an agreement with a note buyer are make sure they are reputable. Everything must be in writing and understandable to you before signing off on the deal.
Any reputable note buyer will be more than happy to answer any questions you may have and also be willing to explain the entire process. With a small amount of research, it will not be long before you have sold your note and received the cash and are on your way to creating another income stream by selling you real estate note.