How To Buy Tickets – Know Your Ticket Buying Enemies

How to buy tickets… Know your seller

You’ve probably heard of Sun Tzu’s (the famous Chinese warrior) instructions to his soldiers to “know your enemy” before going into battle.

Well, the same goes for buying notes.

“Know your seller” should be the mantra for every note buyer (and stockbroker!).

Because?

Because if you don’t “know” your salesperson, you may be entering into a negotiation with them with no idea of ​​their key negotiating points.

An example of how to buy notes, my recent offer

A bank has a first mortgage on a single-family home in Salt Lake City that it wants to sell.

The borrower has not paid the note in more than 120 days, and the note is more than 2 months past due, so the entire loan could be considered past due.

The bank has not served the borrower with a notice of foreclosure.

And they’ve called you to find out if you want to buy your delinquent note and mortgage.

I looked at this loan first from a price point of view: how much could you offer for it.

We obtained a title report and BPO and discussed compensation provided to us by a local real estate agent.

And we present our offer.

My representative at the bank hinted that I would need the approval of a senior personnel committee at the bank.

But she was very cautious in answering any of my questions about where I needed to be in the prices.

to sell, and what was the status of the borrower.

I got a little suspicious and tried to probe for more information, but she immediately fell silent and said, “I am not at liberty to say more about our borrower.” Something was going on in this note purchase agreement.

It was strange that the bank representative would react that way; in fact, it was the first time he had seen that kind of response to an individual loan before.

How to buy tickets: tips for talking to the banker

So I called her back and tried some exploratory language on her.

“Would it be safe to say that the bank has a unique relationship with this borrower?” I asked her?

“Absolutely,” she replied immediately.

I was curious: what was going on here in this delinquent mortgage deal?

So I kept on fishing, understanding full well that she couldn’t reveal any information to me, but that she

he did not object to my insisting on more information, as long as he could answer with a yes or no.

“And there’s a reason the bank doesn’t foreclose in this case, right?” I asked.

“Yes,” she answered simply.

“And you probably don’t have the freedom to tell me, but this sounds like it’s going to be a tough relationship for him.

bank to foreclose, is that correct?”

“Absolutely,” she replied again. “I can’t tell you anything more than that.”

“One last question,” I asked. “Is it safe to assume that the bank may be more open to an offer for this loan

which clarifies what exit strategy we will pursue with the borrower rather than an actual purchase price

for the delinquent note?”

“Yes,” he answered shortly again. “That would be fine”.

So what was going on in this note deal?

Well, what I learned in two more phone calls with the woman I was doing business with at the bank was that the borrower was very well connected in Salt Lake City political circles, and her ex-husband was a close friend of the bank president.

It turned out that executing it could create a political uproar for the bank. Therefore, the bank was exploring discreet options to get rid of its delinquent loan, namely through a sale of notes to an outside investor.

The lesson to be learned from this example of How to Buy Tickets

If you don’t take the time to research WHY the seller is looking to sell a loan and the circumstances surrounding it

the sale, you may miss out on the seller’s key negotiating points in a transaction entirely.

In this case, it was not the price. It was what we planned to do to settle the promissory note with the borrower. The price was much less of an issue.

Your How to Buy Notes Action Items of this:

1) Always try to understand WHY a bank wants to sell you a note or group of notes.

2) Try to find out what are the key negotiating points for the bank to sell you this default

mortgage. Usually it is one or more of the following:

A.Price

b. Speed ​​with which you can close

against Your ability to close (in other words, the bank cares more about whether you can close than the price the Buyer is offering for the discounted note)

d. Your note purchase exit strategies (in other words, the bank can determine whether or not to accept an offer based on what type of buyer you are—are you a no-modification foreclosure transaction, for example?)

So keep all of this in mind the next time you talk to a bank about buying tickets.

A ticket-buying warrior will make you so much better!

Talk soon,

Dean