The #1 Oversight That Real Estate Note Holders produce When Selling Mortgage Notes

The most frequent error that a real estate note holder makes in my experience starts when the note holder first draws up the note or contract. What they do, or should I say what they don't do is check the potential buyers credit score before signing on the dotted line on that mortgage note. When I first started seeing this practice, I really could not even believe it, and now that I have been in the note buyers business for quite sometime I see this practice of not checking the buyers credit score all the time.

What the mortgage note holder does not realize is that checking the buyers credit score would save him/her money both in the present and also down the road.

How is that you ask? Well let me start by saying that checking the possible buyers credit score will put your mind at ease, just knowing that the potential buyers credit is good and you are comfortable that the buyer will be able to pay the debt back to you. I don't know where this practice of not checking the potential buyers credit report comes from, but I my self have "never" tried to get credit without someone checking my credit report.


The other way that checking the buyer credit report benefits you is if in the future you feel like you would like to sell your Mortgage note, promissory note, contract for deeds, or just about any type of real estate note and turn it into a cash lump sum. By checking your buyers credit score when you first put together the note, you actually made your note worth more in the future.

The reason for this is that when you are ready to sell your mortgage note one of the things that the note buyer is going to require from you is the payors (i.e. the person making payments to you on your note) credit report information. The one thing you must remember is that to the note buyer the higher the payors credit score is the more the note buyer will offer you when you sell your real estate note.


The payors credit score is going to be one of the major factors that the real estate note buyer looks at when estimating how much to offer you when you sell your mortgage note. The reason this is such a large factor is the the note buyers perspective is the higher the credit score the less risky the note is. So as you can see checking the potential buyers credit score before you sign a note can make you money in the future.


Ok, I know what your thinking! What do I think is a satisfactory credit score when it pertains to Selling real estate notes, Selling mobile home notes, Selling promissory note, or selling any cash flow note? My answer to that would be that this is something that is up to the individual note buyers, and to an extent the note seller, but I myself would not accept a credit score less than 565,so that would be the low end.

The higher it goes from there the more the buyer will offer you when you sell a real estate note. Very important: The payor's credit score is going to make up approx 35 to 40 percent of how the note buyer estimates the value of your note. So always remember when you are drawing up a note always check the buyers credit score, as it will benefit you in many ways.

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