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Push The Partial

Written by Jeffrey R. Armstrong – President/Owner of Armstrong Capital

Your favorite Master Note Buyer – Straightforward, Honest, Fair…

Your marketing efforts finally start to pay off and the note holders start to contact you. You do everything right. You have found the prospects, gathered the information, submitted the complete and legible mortgage worksheet to your favorite Master Consultant and a couple of funding sources and obtained some quotes. After careful consideration you subtract what you believed to be a fair fee for yourself and presented your adjusted offer to the note holder using some of Jeff Armstrong’s favorite Scripts and Tips. But, for some reason, the sellers respond by saying something similar to “… thank you for your quick response but I’ll think I’ll hold onto it for now…” and the conversation is ended. You wonder what you could have done wrong and why the note holders won’t accept your offers.

Well, did you offer them several different options for their note or did you just give them a price for the full purchase? I would guess that you just gave them an offer to purchase the entire note. If that is the case you are not using the full extent of your cash flow knowledge as a consultant to custom tailor a transaction that will fit their needs. Did you really make an effort to determine what their cash need or want could be? Sometimes a consultant can get so wrapped up in the numbers and description of the note, mortgage and property that trying to actually assist that person with their cash flow needs becomes secondary.

It is my opinion, backed by personal statistics, that when you limit yourself to offering only a full purchase quote your chances of actually getting the deal are greatly diminished. Over my thirteen year cash flow career thus far and being involved in over 1200 closed personal transactions over that same period, in any given year 60-75% of my closed transactions are some form of a partial purchase. The different partial purchase options have been instrumental in my success as a note broker and cash flow consultant.

“Pushing partials” as I call it is a three step process. The first step is to initially do the best you can to determine the actual need or want of the seller. As I have mentioned before, it is not our job to convince people to sell their income streams but to be ready, willing and able to assist them when they have a cash need or want. Sometimes the note holder will be aloof and not want to give us an exact number of dollars they are looking for. Some note holders feel that if they give you an exact number of dollars they really need that they somehow will be losing more money than necessary or that they might be able to get a better quote if they just say that they need as much as they can get. Unaware that they may not need to sell the entire note it is our job to explain to the note holder their options and the benefits of only selling just a portion of their note to get the immediate cash they need now and still retain an interest in future payments.

The second step comes in submitting the worksheet to the funding source. Not all funding sources will purchase a part of a note so check your funding source directory; some of them will only purchase the entire note. When your worksheet is filled out and before you send it to your favorite Master Consultant and a couple of funding sources you will need to request a couple of partial offers. If you don’t request any additional options you will probably just get an offer for the full purchase of the note. At the bottom left hand corner of your mortgage worksheet there is a space for a full purchase offer and then a couple of spaces that say “Buy ____ payments for:”. It is in this space that you will structure a couple of partials that you would like the funding source to quote for you. Maybe you would like a price for half of the remaining payments and a quarter of the remaining payments. For example, if the note has a 20 year term (240 months) maybe you would request a price for 120 payments and 60 payments in addition to a price for the full purchase. Then you would submit it to the appropriate funding sources and obtain some offers.

The third step in pushing the partial is in presenting your adjusted offer to the note holder. After you have obtained the offers and subtracted your fee you want to present the options to the note holder in a positive way. One way to do this is before you contact the note holder back you want to calculate out the remaining principal balance of the note when it returns to the seller on the partial options. For example, if you want to give the note holder an offer for the next 120 payments and there will be 117 payments remaining on the note after the 120 payments has gone by, you would calculate the remaining principal balance on the note for the 117 payments. If necessary, your favorite Master Consultant or funding source could help you with this calculation. Armed with that information you can now present the partial options to the seller and show the note holder how they will be able to get more money out of their note by selling just a portion of their note by adding your offer to the remaining principal balance of the note when it returns to them.

Many times the note holder is not even aware that selling a part of their note is even an option. In addition, by giving the note holder two or three options, the note holder may come to the realization that a partial option would be much better for them and you’ll then have the note holders saying things such as “…Wow, I didn’t even know I could do that…how much will you give me for 96 payments?…”. Become familiar with the different types of partial options and you never know, you might be the only the note holder contacted that is “pushing the partials”.

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