How Do I Sell A Note - Posted by Thane, MI

Posted by Sean on March 01, 2001 at 19:55:25:

What’s the credit of the person making the payments like? Did you get a credit score on that person? How much is the mobile home worth?

If the buyer’s credit is ok I’d say the note’s worth at least $6,000.

How Do I Sell A Note - Posted by Thane, MI

Posted by Thane, MI on March 01, 2001 at 10:49:39:

I have done 4 Lonnie Deals and have created 4 notes. I want to sell one of the notes to generate some cash. I have a buyer, but I am confused as to how I calculate what a note is worth. PLEASE can sombody give me a formula. The note is for $9,500 for 60 months at 12.75%. I am going to sell it as soon as it is created so there are 60 payments. If I want cash for it, what is it worth?

PLEASE, ADVISE.

Re: How Do I Sell A Note - Posted by David Butler

Posted by David Butler on March 01, 2001 at 19:59:33:

Hello Thane,

Well… the bad news in your case is that there is no “formula” for such a calculation. However, down below here, just over the past three months, we have probably had roughly 50 closely related comments about what goes in to determining the factors affecting the discount price for a note.

A brief recap - you gave the balance and terms. What you need, to finish the equation, is sale price/ appraised value, Payor credit history, Payor profile, Payor debt ratio and down payment. Then you need to know what yield rate a particular investor will require for THAT note.

That last one is the toughest variable, because Fair Market Value isn’t quite the same thing as Investment Value (we have a FREE report, “What’s My Note Worth” coming up in a couple of weeks that will discuss these issues). In the meantime, you might find it helpful to review our FREE report, NOTE GRADING/PRICING GUIDELINES to get a fairly accurate ballpark “fair market” estimate… be sure to go to the MH pages when looking through the several weighting factors that come into play… at: http://notenetwork.com/at.cgi?a=118510&e=Reports/Note.Pricing.Guidelines.html

That should help you get pretty close to a reasonable pricing target. (Be aware that the last update was mid January, and the market has softened up a little more, meaning yield requirments are increasing - if that trend holds, it will be reflected in mid April update).

Hope that helps, and best of luck.

David P. Butler