Posted by Michael Morrongiello on December 28, 2000 at 16:27:47:
What’s the most I can expect from selling a note? - Posted by Mike
Posted by Mike on December 26, 2000 at 13:44:26:
I’m trying to determine if creating a mortgage and selling it would be worthwhile for two rehabs that I’m trying to sell. I have two buyers that fall just short of qualifying for the cash out that I need. Without getting into details about credit and employment, I realize that nobody can tell me exactly what to expect from a note buyer. I guess what I’m trying to understand what a typical LTV for a 550-600 FICO buyer would be. I’ve investigated selling notes in the past and have found that it’s usually more advantageous to work with a mortgage broker to create new financing.
Has anyone had luck with selling notes?
100% + 3% seller contribution 103% financing - Posted by Ali
Posted by Ali on December 27, 2000 at 01:05:54:
If fico is 580 plus they can get 100% financing plus 3% seller contribution towards the closing cost.
It Depends… - Posted by Michael Morrongiello
Posted by Michael Morrongiello on December 26, 2000 at 20:11:39:
You are right on the money about considering the use of Seller financing to SELL just about ANY property in the FASTEST most efficient manner.
A seller financed note in todays market if structured correctly can typically bring somewhere between 92% -95% and maybe more of its actual balance to you in CASH at the time it is sold.
Note funders (including myself) are looking at the following issues and how they will impact our pay price and risk:
- Cash money down by prospective buyers
- Seasoned note or unseasoned
- Starting LTV of the 1st lien note to be sold
- Prospective buyers employment & stability
- " " overall credit profile
- " " credit scores
- Upkeep of property, its location, and condition
- Finally the actual repayment terms of the note to be sold
With DETAILED input surrounding these issues, and some basic documentation provided the note funder, a quick pricing can be provided that will have eliminated a lot of the guessing.
The KEY to maximizing what you will receive when you sell a seller financed note is in the STRUCTURE and preliminary screening you do upfront.
Feel free to contact me if you would like some assistance.
To your success,
100 % - Posted by Bud Branstetter
Posted by Bud Branstetter on December 26, 2000 at 17:33:29:
But that 100% is for an 80% LTV note that is created at the interest rate the note buyer wants to invest at, a prepayment clause, and you broker it by paying appraisal and title policy. With a near 600 score they may even go up to 90%. Otherwise you will have to season that second and structure at a little higher rate.
My experience has been that if the broker comes in with better than an 80% loan and I carry the rest I net more. At 80% or less I can net more cash by brokering it myself. Use a note broker and you will have to pay them. Use someone that does direct funding like American Note, FSB or Michael.
Re: What’s the most I can expect from - Posted by phil fernandez
Posted by phil fernandez on December 26, 2000 at 14:18:17:
You might want to post this on the paper/notes section of this site for responses.
If the buyer will owner occupy, with stable job history and the LTV is at 80% or less you should be able to find a note buyer. Note buyers will generally want to see 5 - 10% of the buyers money into the deal.
One big thing to keep in mind. Alot of note buyers promise the world with their quotes and then can’t deliver. Mike Morriegello of Sunvest is a good contact for you. He bought one of my notes. Very helpful and a nice guy.
Re: What’s the most I can expect … - Posted by Jim Locker
Posted by Jim Locker on December 26, 2000 at 13:58:55:
You might get 80 to 85 percent of face value for a good quality note. Such a note is seasoned for about a year with a good payment history, and the buyer’s credit is not total crap.
Be careful dealing with note buyers; there are some crooks out there. One once offered me a contract where the money would be paid a minimum of 72 hours after closing (no maximum), there was no end date on the contract (in other words, close whenever buyer decided), no penalties for buyer non-performance, and I would have to pay a 10% penalty to get out of the contract if a better offer came along.
Needless to say, I didn’t sell that note to him.
Re: 100% + 3% seller contribution 103% financing - Posted by Ali
Posted by Ali on December 27, 2000 at 01:08:36:
100% +3% seller contribution is for conventional ( subprime loan ) not for Note.
Re: It Depends… - Posted by Jeremy FL
Posted by Jeremy FL on December 28, 2000 at 15:30:05:
Please e-mail me your number so I can contact you about a possible deal I am working on. I am very interested in this kind of exit strategy for the re-habs I do.