Posted by SusanL.–FL on November 27, 2001 at 19:02:56:
nt.
Want to sell my commercial note - Posted by SusanL.–Bradenton, FL
Posted by SusanL.–Bradenton, FL on November 27, 2001 at 16:54:37:
Hi Everybody,
I’m interested in selling my commercial note. Who do you suggest I go to?
Thanx.
SusanL.
Re: Want to sell my commercial note - Posted by Dana Onyshko
Posted by Dana Onyshko on February 07, 2002 at 07:48:13:
Hello.
If you still are holding any notes, simply go to my business site and receive a free quote online. I buy commercial notes nationwide!
http://www.allmortgagebuyer.com
Re: Want to sell my commercial note - Posted by David Butler
Posted by David Butler on December 01, 2001 at 14:39:02:
Hello Susan,
I assume by “commercial note” you are talking about a real estate note secured by a commercial property (which also includes multi-family housing of more than four units in terms of underwriting) - and I bring this up only because we frequently encounter some confusion on the part of the public, in relation to interchanging the use of the term “commercial notes” and “business notes” (which are notes secured by the sale of an existing business entity, which may or may not include real estate).
But, the information gathering process is the most important function at the outset, and Mike hit the nail right on the head in that regard. A fairly standard format should be kept in mind when presenting the information on your note, in your intitial presentation, somewhat along the lines of the following (which is a basic business note presentation - I’ll note the differences for a commercial note below):
Location: City & State
Type of Business:
How Note Created: Owner Carryback? Other?
Sale Date:
Sale Price:
Down Payment:
Date Note Originated:
Original Note Balance:
Lien Position:
LTV: CLTV (if junior lien):
Interest Rate:
Original Term:
Payment Amt:
Date 1st Pmt Made:
Date last Pmt Made:
Remaining Balance:
Payments Made:
Remaining Term:
Payor Ownership Structure: Sole Proprietor/ Corp. Partnership / LLC / Trust / Other
Payor Credit Rating:
D & B Rating if applicable:
Personal Guarantees:
Value and Brief Description of Hard-Asset Collateral:
Tangible Value ______________ Intangible Value _______________
Intangible “Soft” Asset Collateral: _______________________________________________
Goodwill Value: _________________
If real estate included,
Zoning Factors:
Usage:
Operating History, including NOI past five years (or if less, for existing years):
Any Other Liens (include rate/term/bal):
Debt Coverage Ratio:
For a “commercial note”, you would use Property Type in place of Type of Business, and offer a brief description of the real estate securing the note. In addition, you would make a comment about the current value of the collateral real estate, and how you determined that value. You also want to be sure to add any comments related to information that would materially affect the note (such as modifications, delinquencies, forebearance, concessions, impending zoning changes, etc)
Also, you would simply delete the discussion related to “hard-asset” values (unless you did indeed take additonal collateral as security for the note), as well as the discussion related to “intangible soft assets” and “goodwill”, which obviously not apply in the case of a “commercial note”.
Your efforts in preparing this information in a clear and concise manner is instrumental in getting started, and is usually completed in a simple one to two page “submission summary”. The more critical step will come after you have accepted an offer - during the due diligence process. A note buyer will need hard evidence supporting both the collateral, and the Payor - in deciding whether to purchase your note, and at what price. Having your ducks in a row before hand, and using that information to prepare your initial “submission summary”, is the best chance you have of obtaining a “real” meaningful quote, selling your note, and obtaining a reasonable closing time frame.
Too many people on both sides of the fence (sellers and brokers/funders) get too carried away with “shopping for quotes”, rather than getting down to the business of selling the note. “Quotes” aren’t what sell notes - information does.
The better prepared you are for this stage, the less chance that you will encounter the so-called “bait-and-switch” tactics that Mike alluded too - which is more frequently due to seller misrepresentation (whether intentional or not), lack of adequate seller documentation, and/or “broker” incompetence, rather than intentional deviousness on the part of “brokers” and/or funders.
That makes sense, if you stop and think about it. Not really much different than selling a used car. A buyer needs to know exactly what he buying, for his “quote” to mean much, right? What year, make, model are you selling? What’s the mileage? Leather, cloth, or vinyl interior? Heat/AC? Cassette/CD system? Condition? etc…
Finally, it is worth noting that during its approx. 60 year history, the private cash flow secondary markets have been “broker-driven”, and continue to be so. Approximately 90% of all note transactions are facilitated through note “brokers/finders”.
Your best bet is to look for the deal that most closely satisfies your needs, and not get too caught up on “who” or “how” the deal gets done. Your time is better spent in making sure that you put together the best package you can, in providing the critical information needed to obtain serious quotes, and support the due diligence process. That, more than anything, will determine the successful sale of your note.
Hope this helps, and best wishes for your success!
David P. Butler
Price Vs Performance… - Posted by Michael Morrongiello
Posted by Michael Morrongiello on November 27, 2001 at 18:32:28:
Susan:
First thing is to gather together all of your relevant file documentation so that you are familiar with what you have and may also be missing.
Just about anybody can provide you with a “quote”… However that “quote” is often so filled with "subject to’s, stipulations, contigencies, etc. that it is nothing more than a real GUESSTIMATE as to what you can actually be funded when it comes time to close.
Most legitimate note funders that are NOT brokers but that can actually fund the purchase of your deal like to be in a position of having your provide them with some basic documenation so that a cursory review & underwriting of the file documents can take place. It allow them to look at the whole picture surrounding the Note transaction, its pluses, minuses, documents used, etc. and then issue to you a more FORMAL approval notice (or actual commitment letter, agreement, etc.) that will outline EXACTLY what they will fund and under what conditions (we clearly prefer to operate this way).
Operating in this fashion avoids the proverbial “bait and switch” tactics some brokers employ after intitaling “quoting” a deal to a customer and puts all the “cards on the table”.
So, get your paperwork together and be prepared to evaluate not only how much you can be funded, but how REAL are the circumstances and conditions of actually closing with the funder who choose to do business with.
Warmly,
Michael Morrongiello