Poll: If You Held a Seller-Financed Note…

[Melinda Eilts]

If you’re holding a seller-financed note, what would you choose?

A) Steady monthly payments

B) Cash out now for liquidity

C) Depends on the interest rate & terms

[John Clark]

Quote from @Bill B.:

I'm 6 months in to collecting 7% on a 75% LTV note with a five year balloon…

The only way someone could convince me to sell the note would be to offer 6% or more over the current balance. (I assume I can get 4% guaranteed from the bank so that covers 2 years of lost interest income.)

Personally. I’ve never seen someone offer the current balance, much less a premium. Even on a performing note, at a decent interest rate, where a failure to pay or failure to payoff the balloon would result in massive gains. 

How about you?

If they’re not offering a premium, what does that tell you about the risk? Are they bottom feeders, or are you blind?