WHAT IS A PROMISSORY NOTE (I.O.U.)

A written document that states a promise to pay, and the terms which include the amount, interest rate and length of time. The note states the terms in which the obligation is to be paid such as, the payment amount, the interest rate, when the note is due and to be paid in full, etc. Some states use the trust deed as the primary security instrument and other states use a mortgage contract. The major difference between the two instruments is the manner in which the property is foreclosed.

Your Typical Real Estate Note

Let’s look at a typical note and why the Note Holder would want to sell it.

• Original Amount: $25,000
• Ten (10%) Percent Interest
• Paid off over 15 years
• Monthly payment: $268.65
• 18 Payments made – 162 remaining
• present Balance: $23,833.84

Here are several reasons why the Seller would sell his note:

• The advantage of a lump sum of cash now instead of no more small monthly payments
• Medical emergencies
• Immediate cash to pay off tax debt
• Pay off credit card debt
• Paying for college education
• Buying a new home or business
• Taking that dream vacation
• Retirement
• Divorce
• Distribution of partnership
• Division of Inheritance
  

More Reasons Note Holders will Discount Their Note:

• They can make a lot of money on other investments if they have their money from their note now!
• Big Dollars vs. Little Dollars – Small monthly payment – Here’s a lump sum of cash now.
• Fear of Delinquent Payments – The note won’t be worth anything if the Payor defaults (doesn’t pay).
• Tangible vs. Intangible – They won’t discount the house, because that’s a tangible asset, but they will discount the note because it’s intangible.
• Relatives or Friends – Won’t foreclose and will sell at a steep discount to avoid conflict.
• Don’t Know How to Foreclose – It’s easy – Get a real estate attorney.

Have a promissory note you’d like to sell? Are you interested in finding out today’s value of your note? Answer the following questions and contact Select:

• What is the property address?
• What is the note secured by? (Type of Property)
• What is the property worth?
• How was that value established? By sale or by appraisal?
• Do the Buyers live there?
• What was the date of the sale (appraisal)?
• Is your note a first or second (what position is it in)?
• What is the principal balance on the first loan?
• Who is the lender on the first?
• What is the interest rate on the first?
• What are the monthly payments on the first?
• What is the due date on the first?
• Is the first a FHA or VA loan?
• What was the original face amount of your note?
• What was the date of your note (when it started)?
• What is the interest rate?
• What are the monthly payments?
• What is the due date (when the note ends)?
• Is there a balloon payment at the end?
• How much is the balloon payment?
• Are all the payments paid up to date?
• What is the loan balance right now?
• What is the last payment that has been made (month)?
• What is the person who owes the money like?
• What does he do for a living?
• Why are you selling the note?
• When do you need to sell by?
• How much are you asking for the note?

If you have a note to sell please contact us at 916.847.8849