Last week when I was chatting with an Private Owner Financed Note Seller, it came up in our conversation that he had received an offer on his note that he had decided to accept. I congratulated him and asked if he had anything else to sell. He told me to hold my horses because he had canceled that contract with the note buyer. That perked my ears because that signaled to me that there was something wrong with his deal. The Private note seller then went on to tell me that he canceled the deal because the Note investor came back 3 days after they signed a contract and told him that he no longer wanted to buy the whole note and changed the deal to a partial purchase.
I explained to him that this happens sometimes during the Due Diligence phase because of a number of factors. The appraisal didn't come in, there were some missing docs or the credit didn't check out. The Note seller agreed with me but then told me that the Investor didn't cite any of those reasons, as a matter of fact he didn't cite any reason. The note seller had given him copies of all the paperwork so there was full disclosure.
The light bulb went off in my head. I told him that he got caught in a game of "Dirty Note Investor Switchroo" That is when the note investor will quote a sightly higher price than anyone else to get the contract signed, then wait until the Due Dalliance is started and even a closing scheduled. Then change their offer to one that is more advantageous for the Investors benefit.
Why do these Dishonest investors do this? Because they can, there is no Note Police or Seller Financing SEC to report to. What these investors know is that a lot of the time, the sellers will be in the process and they will say "What the heck, We are close to closing, just agree to the terms". They think they are pretty slick and can get away with it for a while, the only issue is. ฝากขายคอนโด The Seller Financed Note Business is a small world and those guys will soon be run out of business because their reputation does precede them and will catch up to them. As for me, I now have identified 1 more note investor that I won't every consider doing business with.
I congratulated this Note Seller and said that because he didn't bend to this game of Switchroo and that I would be more than happy to quote him a "Fair Market Value" Note Price. I told him to fill out our online note worksheet and that I would get back to him in a few days with pricing.
Please remember, if you have a contract signed and the note investor wants to change the price. It needs to be based on solid issues, ie bad credit, low appraisal, missed payments by the buyer, recent natural disaster.
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