What Are Note Buyers?

Note buyers analyze notes before making an offer to a note seller.

Note buyers seek out a note seller who is currently receiving monthly payments for an item or service and offer to purchase the promissory note from them. When sold, the payments then go to the note buyer.

Identification

Note buyers regularly seek note sellers by developing relationships with real estate agents, attorneys, title companies and accountants who might have clients interested in selling their notes.

Private

Individual note buyers not operating under a business name are considered private note buyers. They usually purchase promissory notes attached to homes or other real estate.

Commercial

Banks and governmental organizations that purchase promissory notes are considered commercial note buyers. They typically buy promissory notes attached to mortgages and student loans.

Considerations

Note buyers analyze notes, looking at the value of the note, payment history and sometimes credit history of the borrower before making an offer to a note seller.

Funding

Note buyers often sign agreements with the note seller, and paperwork is included for escrow to process at the time of closing. Funding is processed with the agreed-upon amount given to the seller. The note buyer may begin to inform the borrower that notes will be paid to the new note buyer.

References

• "Winning in the Cash Flow Business" Russ Dalbey; 2004