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What Is A Note Buyer

Jun 5, 2008
What is a note buyer? A note buyer is a person that specializes in locating and purchasing contracts that already exists between two parties where one pays the other a monthly note until the balance of the contract is paid in full. These contracts could be in the form of a land contract, structured settlements, annuities, lottery winnings, mortgages on houses, or the accounts receivable from a commercial entity. Selling a note to a note buyer is not a difficult process but does require a certain amount of due diligence on the sellers part to ensure proper value is received for the note.

Access to lump sum cash is what makes the process so appealing to potential note sellers. Receiving cash that would otherwise take years to receive in monthly installments. People that hold notes and wish to sell them, do so for various reasons. Some people sell their notes if they are approaching retirement and want to free up cash for extended travel or other retirement dreams. Some people liquidate poor performing notes to use the money to invest in other notes or income streams while others may need quick cash due to financial stress or emergency reasons. Whatever the case may be, selling a cash note is a rapid avenue for receiving cash quickly.

There are a number of options available to a note seller. A person holding a note can sell the entire note or they can sell a portion of the payments left on the note. For example if someone were holding a fifty thousand dollar note, they could sell twenty five thousand dollars of the note to a note buyer and retain the other twenty five thousands dollars for themselves. The monthly note can also be divided in half where fifty percent goes to the note holder and fifty percent goes to the note buyer each month. There are different options available and a professional note buyer will explain all of the different options available to fit unique needs.

A professional and ethical note buyer will guide you through the note buying process and will be happy to explain every phase of the transaction, provide you with referrals of his past clients and will not be pushy. A note buyer also has many different things he must consider before agreeing to the purchase of a note. He must consider his risk first and foremost and to do this is must take into account the balance of the note, time left until the note is paid in full, interest rate, and the credit worthiness and financial stability of the may. The note buyer is assuming risk so it is in his best interest to consider these factors and more before agreeing to purchase the note. The less risk he underwrites, the better price he can pay out for the note.

It does not matter what type of note that is held, there is usually a market to sell any contract that requires a balance to be paid in installments over a given period of time. Finding a professional note buyer is the first step in the note selling process and does require a bit of research to locate a reputable note buyer and receiving a fair price for a note. But this research will payoff in the end when the note seller receives lump sum cash to follow his dreams or pursue other investment ideas.
About the Author
Phillip Hatley writes about varying fields within the financial sector including cash flow notes. Visit his cash flow notes blog for more information about note buyers.
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