Deed of Trust Buyers
When looking for trust deed buyers the first step is to know what is involved in selling your trust deed. This would start with a document review which involves sending a copy of your trust deed to the potential buyer. This may take some time depending on if you have copies on hand or if you need to order copies from the state.
The next step to find a trust deed buyer is to perform due diligence, which is where the buyer reviews your trust deed and sets up an escrow account. Due diligence also includes paying for a credit evaluation, an appraisal, and a title review and is performed by the buyer with the seller’s permission. Once due diligence is completed, you will receive the final payment for your trust deed from the buyer at the closing.
Now the seller needs to decide which of the two payment options they would like from the trust deed buyers. There are a two different options; either full purchase or partial purchase. Full purchase is where the seller receives one lump sum cash payment from the trust deed buyer and there are no further payments due. This provides the largest lump sum of cash and takes the seller completely out of the picture. This also transfers any risk of debt or leans against the property to the buyer and the seller is essentially removed from any responsibility for the deed.
Partial purchase is the other option for sellers to consider. The trust deed buyers will give the seller a lump sum of cash at the closing and then make future monthly payments. Depending on the contract for the future payments, the seller may have the option to accelerate the debt under special circumstances. They can also transfer the remaining debt to a third party, but they will lose part of the future payments for the transaction fee.
Trust deed sellers are usually more concerned about the pricing and how much they can receive for their trust deed. trust deed buyers can give you an estimate of the potential value of your trust deed. Most trust deeds or notes fall between the good note, where you can receive 90% or more of the principal balance, and a bad note, where you would likely receive 70% or less of the principal balance. Most notes fall between the good and the bad receiving 80 to 85% of the principal balance. If problems do occur you have the right to cancel the transaction without any further obligations before the final closing.
When selling your trust deed you also should look at how the owner is listed on the deed. The trust deed buyers will have to have both party’s permission and signatures if the trust deed has the word “and” between the owner’s names. If the trust deed contains the word “or” then either party can sign the trust deed and sell it to the buyers. As the seller you should always look closely at the trust deed before you consider selling to make sure you are legally able to liquidate the property.
For more information or with any questions regarding your trust deed, please visit Preferred Note Investors on the internet at www.preferrednoteinvestors.com. You can also contact Larry Nein of Preferred Note Investors via e-mail at larry@preferrednoteinvestors.com or by telephone at 704-896-0104.