Re: How Do I Sell A Note - Posted by David Butler
Posted by David Butler on March 01, 2001 at 19:59:33:
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