When learning how to sell mortgage notes online, it is important for you know your numbers. First, determine the amount of money owed on the unpaid principle balance (UPB) of your note. Even if there is a total payoff balance that is more than the UPB, you as the seller should have it listed.
You must also determine the monthly principal and interest (P&I), which is the monthly payment that comes in every month on that mortgage note. You should also be knowledgeable of what the monthly payments are and the number of monthly payments remaining.
Potential buyers must be advised of the current interest rate or coupon rate on the note and the amount of yearly or monthly interest that the borrower owes. You should also list the city and state the collateral located in. However, never list the complete address prior to receiving a commitment from a real buyer.
In addition, you should include the lien position (i.e., first position, second position) and whether the note is performing or nonperforming.
The Collateral File
When you have all the necessary data, you will need to organize a digital collateral file. This is the collateral file that comes to you when you first purchase a note that has all the assignments, allonges, quit claim deeds, and anything that has happened to the property since it was built.
It would be helpful to review the original collateral file you received when you purchased the note and ensure that everything is in order. Therefore, when you scan the information into your computer and store it in a digital folder, it is conveniently accessible and easier to send to another buyer upon accepting their offer.
Marketing Your Note
You can now market your note online to potential buyers. It may be helpful to make a one-page flier with a picture of the property and all the important information for potential buyers to view online through social media sites such as LinkedIn or Facebook.
There are plenty of Facebook groups for note investors who are looking for notes to buy. You can join these groups and receive permission from the administrator to post your note for sale. There are also websites you can utilize to your advantage such as PaperStac.
It is important to know your numbers because you may have to enter the appropriate data in this website and include a picture of your collateral. In addition, it would be wise to send out a mass email to your contacts because one of them may be interested in purchasing the note from you.
The Letter of Intent
When a potential buyer makes an initial offer, it is important to ensure that you get a document in writing such as a letter of interest (LOI). The LOI is not a binding contract. The goal of the LOI is to document that another party has expressed interest in purchasing the asset at a price provided.
This will enable you to release personal information about the property in a digital collateral file that should not be released until another party has committed to buying the asset from you. Then, they can begin the due diligence process.
After you agree to a price with a potential buyer, use the LOI to secure the interest they have in the deal but then provide them time to conduct their due diligence, which is generally 2-7 days.
This allows them enough time to order broker price opinions (BPOs) and title reports and review the entire digital collateral file so they can verify that it is a legitimate, clean asset that matches their criteria.
The buyer can then decide if they want to move forward with the purchase. If they do want to move forward, you need to get a loan sale agreement (LSA) in place which commits the buyer to purchase the asset. This confirms that they will purchase the asset for the agreed upon price. The LSA includes other important information which protects both the buyer and the seller.
