would the seller be considered "desperate"? for selling. a member of my church sold her note for 90% because she needed the money after her silly husband bet the last $13,000 that was left in their savings. she no longer lives with him. but there was relief after selling her note. she needed cash now.
2007-09-15 16:18:45 · 5 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
If you find someone to buy a note at 90% of value, take it. Most note buyers discount much more than that. Just make sure that the note buyer is the actual buyer, not middleman (aka. broker) or you may be run through hoops, especially if the broker is not experienced in note transfers.
2007-09-15 16:44:31 · answer #1 · answered by liveinaustin 3 · 0⤊ 0⤋
selling a note at a 10% discount would not be considered desperate. She would have made more money, probably, if she kept the note. However she needed the money then. it is like the difference in winning the lottery. Do you take a lump sum of cash now or get more in payments over the next 20 years. It depends on your situation.
A 10% discount seems reasonable, depending on the terms of the note, what is the reliability of the borrower and other factors. Remember, the purchasor of the note is also taking all of the risk.. If the borrower defaults the note buyer has to deal with those issues.
Meanwhile the note seller has the cash she needs. In most cases this would sound like a very reasonable transaction.
2007-09-15 23:54:40 · answer #2 · answered by rlloydevans 4 · 0⤊ 0⤋
"Desperate" is a range, not a specific value.
If the note carried a good interest rate, and the borrower is rock solid financially, the note might sell for *above* face value.
If the note carried a 2% interest rate, and the borrower looks like he's about to file bankruptcy, then getting 50% for it might be the deal of the century.
Sounds like she was at least *somewhat* desperate.
2007-09-15 23:26:33 · answer #3 · answered by Anonymous · 0⤊ 0⤋
It depends on the interest rate of the note, and how long until due, and how likely the debtor is to pay.
It's all about the time value of money. If it isn't due for twenty years, and the interest rate is 1 per cent, then 90% of par value is generous.
2007-09-15 23:25:24 · answer #4 · answered by open4one 7 · 0⤊ 0⤋
I wouldn't consider the seller to be desparate. If you had a $100 gift certificate to a store that you didn't want anything at, would you sell it for $90? Well, it's the same theory.
If she was selling for a 50% discount, then that's pretty dramatic.
2007-09-15 23:27:23 · answer #5 · answered by Anonymous · 0⤊ 0⤋