Why is it important to use a third-party to sell your Note?

So, you have decided to sell your note, you found a buyer and agreed on a price.  What is the next step?  Should you write something up and shake hands?  The smart answer is NO.   Even if the sale is with family or friends, it always make sense to use a 3rd party to close your transaction.

Protect yourself with outside closings!

When an investor has performed their research and is ready to purchase a private mortgage note they will ask the seller to deliver original documents (note, recorded mortgage, etc.) and sign the transfer package.

The Note Buyer

The note buyer will want these original documents before the funds are released to the seller.

The Mortgage Note Seller

A note seller may understandably wonder,

“How do I know I will ever receive my money once I turn over the documents establishing ownership?”

The Note Buying Challenge

So the note buyer wants the documents before the money is released, and the seller wants the money before the documents are released.

The Solution

Using an outside closing through a title company, attorney, or escrow company easily solves this impasse. The outside closer will act as an independent third party (or fiduciary) protecting the interests of both parties.

An outside closing is basically an exchange of money for documents. The outside closer will receive the proceeds from the investor into their trust account and also receive the documents from the seller. It is not necessary for either the investor or the seller to physically be present for the note closing with the use of overnight delivery and wire transfers.

Summary

Outside closings offer protection and peace of mind to both sellers and investors when selling mortgage notes.  The fee for outside closings average is $400-$700 and can be paid by either party or split equally. Any legitimate note buyer should be willing to participate in an outside closing through a licensed and bonded closing agent.  Why put yourself at risk by not using a licensed closing agent!

Connect with Peak Notes Why not set up a meeting with a Peak Notes specialist to discuss the Note selling process.   Meetings are brief, cost nothing and can give you more insight into how you can maximize your investment potential! If your property is located in Florida, please click on this link and set up a meeting with John          Meeting with John     If your property is located outside of Florida, please click on this link and set up a meeting with Karen.      Meeting with Karen