Since 2008 I have been asking noteholders who are interested in selling, “why do you want to sell your note?” The simple answer is that the noteholder wants or needs the cash. But, why does he want or need the cash? How does selling this note solve a problem for him? Most folks are eager and happy to tell me what is going on in their life that leads them to this conversation. Some folks are not as open, and feel it is none of my business.
When I know what his motivation is, I tend to get excited. Because if he has a desirable note, I now want to help him achieve his goal.
Over the years, I have always highlighted in my personal notes the reason a noteholder is selling. If you are a noteholder, you may find it interesting why folks like you choose their note asset as the best source for the cash they need. Here are the key reasons I have been given:
- Buy a business
- Pay off a mortgage
- Help elderly parents
- Pay a big tax bill
- Buy a new home
- Move out of state, start a new life chapter
- Simplify life and lower risk
- Make a better investment with a higher return
- Pay cash for a new, expensive car
- Pay college expenses for a child or grandchild
I have noticed for noteholders over age 60, the “simplify my life” motivation is a big one. Some of these folks have a business or multiple properties and their children have no interest in working with or succeeding dad. So, dad starts asking himself “why am I doing this? Who am i doing this for?” If the answer is he is doing it for himself, he then may reach the point where it is not worth doing anymore. Time to move on.
On the other end of the spectrum is the noteholder who has no interest in selling his note. What is his situation? In talking to folks like this over the years, a handful of reasons surface:
- He had no idea a market existed where people like me bought notes like his
- He likes – or needs – the note income
- He has no need for a lump sum of cash
- He does not like the price offered for his note
- He wants to “protect” his buyer, who may be a friend or family member. He does not want a stranger holding the note.
If you are a noteholder, I hope this information will give you some insight as to the marketplace and how it fits into your own situation. Feel free to contact me with your questions or pricing options for your note.
