Selling Your Promissory Note for Top Dollar

 Promissory notes differ from stocks and bonds

Having an investment in a private promissory note, or a mortgage note, or a real estate note is a not the same as an investment in a stock or a bond. Stocks and bonds are traded on public exchanges, openly, all around the world, by the hour, and the day, in quantities of millions. privnote There is no public market for private notes. Private promissory notes are traded one at a time, slowly, over periods of several days or weeks between private parties.

The prices paid for stocks and bonds are public information. The prices paid for notes are not public information and are kept private.

Stocks and bonds are said to be highly "marketable"; private notes are said to "lack marketability". Lack of marketability or "illiquidity" has a significant impact on your note's resale value.

What is marketability?

Marketability is a measure of the ability of an asset to be bought and sold. The ability to convert an asset to cash quickly is also known as "marketability." Poor marketability reduces the value of an asset. Marketability is similar to liquidity, except that liquidity implies the value of the security is preserved, whereas marketability indicates that the security can be bought and sold easily.

Marketability of private notes

The market value of a private note depends upon its own unique terms, wording, and structure.

Every note is a unique investment and therefore has a unique market value. There are several important factors that determine the market value of a private note. Those factors are:

• Secured or unsecured

• Type and quality of collateral security

• Current balance

• Interest rate

• Monthly payments size and frequency

• Number and history of payments made

• Number of payments remaining

• Borrower's credit history, financial condition and employment

• Current level of interest rates for comparable investments

Selling your note for top dollar

Almost every mortgage note can be sold, at some price. Delinquent, non-performing notes can usually be sold at some price. Good quality notes are readily salable, providing the right buyer is located.

There are various and assorted buyers (private parties and small investment companies) scattered across the country. These buyers specialize in buying specific types of notes, such as notes secured by farms, ranches, houses, businesses, etc. To get top dollar for your note it must be matched-up with the appropriate buyer who understands and appreciates its value. The right buyers will quote a net price to you including all closing costs.

Finding the right buyer is the key to getting top dollar

Because private notes are illiquid, have no central market place, and the buyers are specialized and scattered across the country, professional advice and guidance is often required. When selling any other illiquid asset such as a piece of art, a farm, a business, or a house, an expert having specialized knowledge, information and contacts is needed to get top dollar. Art brokers, equipment brokers, and real estate brokers are examples of professional experts helping sellers get top dollar.