Sometimes note holders don’t know the difference between a mortgage buyer and a note broker. They aren’t sure what the benefits of each. This article will describe each type and detail what you should look for in each.

Mortgage Note Buyer vs. Note Broker

Selling your mortgage note to a nationwide buyer means that the person you are working with is the direct purchaser. The note investor is responsible for providing the funds for the note sale. There are no commissions or broker fees involved in the sale of your note. It can often be easier to deal directly with the mortgage buyer. How the note buyer makes money will depend on how much discount is included in the sale and the interest rate established by the note.

The principal responsibility of a mortgage note broker is to not use their own money to purchase notes but rather to “list” the note and find the best investor. Most mortgage note brokers have a strong network of investors that they can work with to find the right match for your note sale. When the note purchase is completed, the investor pays the note broker commissions.

Sometimes, such as the case with ELM Capital, the buyer of a mortgage note may be either a buyer directly or a broker. This is based on the specific circumstances and characteristics of the note. This gives you the advantage of being a seller and achieving your goals in selling your note.

It doesn’t matter what, it is important to find a trustworthy mortgage broker and buyer. Bottom line, you will be able receive a competitive quote regardless of whether you are working with a note buyer/broker. As long as you adhere to the guidelines below.

What to look out for in a note buyer

How do you determine if a potential note buyer or broker is trustworthy? These are some considerations that you should consider.

1. licensed may be required by your note buyer or broker in the particular state where the property is located. Note buyers are required to be licensed in order to protect the seller.
2. You should look for a proven history note buying- The buyer’s experience and expertise will reduce the chance of things going wrong. A more knowledgeable buyer usually has more resources.
3. Be sure to verify the reputation of your buyer before you make any commitments. Ask around and talk to references. There are likely to be negative reviews from past buyers. Conduct a Google search about the company and the individual to verify their license status. The Better Business Bureau can also be consulted to check their rating.
4. It’s always a good idea to compare quotes. This is particularly important to uncover any hidden fees (such closing costs) you might not have anticipated. After speaking with a note buyer, and asking your questions, if you don’t feel comfortable in their honesty or trustworthiness, continue to search for someone else.

When talking to potential note holders, there are some warning signs that you should be aware.
Buyers, such as:

1. Your intuition (or ” gutcheck“) It is common sense that anything that sounds too good to true will probably be true.
2. The price quote you get should be valid for at most ten days. You should not be quoted a price for less than a day or feel pressured to buy.
3. Pay upfront costs is a red flag. You should get the majority of the buyer’s expenses covered by the discount you receive when you sell your mortgage note. Avoid hidden fees.
4. The value for a note can drop due to four factors: 1) credit problems, 2) property valued less than the sale price,/or in poor condition, 3) issues with the documents and 4) title defects that cannot be fixed. These are important to know so that you can take action. If you feel you have been victim to a bait and switch scheme, immediately end the transaction and notify the state authorities.
5. In general, any coercion or pressure to accept a lower sale price is enough to make you not sell to that buyer.

This has certainly been a helpful tool in differentiating buyers of direct mortgage notes.
Mortgage note brokers and information regarding the selling process for a
Note. We are always happy to answer any questions you may have so please call .

Next week’s topic, “Selling a Real Estate Note 101”, will continue our series.
Important information that you should know when selling your note . We hope that you will consider joining us
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