Bidding on a note

3 Replies

Hello BP

Just a quick question, when placing a bid on a note is there any specific paperwork used or is it as simple as sending a message to whomever i am in contact with.

Thank You

We have bid by phone and by email.  Up front paperwork would have been NDAs and agreements required by whoever you are buying from.  Bids are generally binding unless you find some very exceptional issues with the asset after purchase.  

Good luck.

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All of this depends on the Seller of the note and what they have provided in terms of data that you may or may not be able to conduct any level of due diligence on.  Often times a Seller will not share any file contents with a potential bidder until they have an idea of what bid level will be delivered.  In some settings a Seller will allow for due diligence upfront and expect a Buyer to deliver a final bid number which will directly translate into a purchase price.  

Casually talking about bid levels is not uncommon but I would recommend that upon an acceptance of a verbal bid that you take time to convey terms of the process in writing to some degree.  This is just a good business practice and gives both the Buyer and Seller an opportunity to ensure they are on the same page.  Ideas like the potential purchase price, time for due diligence and how the trade will be settled.  There are many moving pieces and charging off into the sunset assuming you are all on the same page can bite you in the rear.  

When we engage with trades we do so in a manner as to preserve capital and mitigate any unnecessary expenses which include doing due diligence - which costs money - on something that won't trade.  In that sense, price is merely one component in a series of components that can and do affect the out come of a trade.  Think of it as a sort of outline to what will eventually be in the contract for sale.  Will the Seller provide representations and warranties to your desire?  Will the Buyer pay for interim servicing?  As a Buyer are you expecting some type of escrow setting like real property (uncommon practice)?  You get the idea.

Communication does not to be overly formal but should be concise and well articulated to avoid misunderstandings.  Hash it out upfront and then start the trade.  You will have more successful trades.  

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