Owning a promissory note, instead of demanding cash, sounded like a good idea at the time you sold your real estate or business because you would have a steady stream of monthly payments at a reasonable interest rate. Right?

(A promissory note is defined as 'A promise to pay a certain amount of money on a peridoic basis, defined by the terms and conditions contained in the Note Document'. Usually, a Promissory Note is constructed during a tangibile property sale event where the property seller 'takes back' a Note instead of Cash.)

Then, you soon found out that one, the interest rate you charged is now too low, two, the payor of the note doesn't always make the payments on time so you have to call and demand the payments, three, you have to pay taxes on the income, four, you figured out that the value of your note diminishes everyday, and, five, you could put the lump sum of the note money to better or now-needed use.

So, you decided to sell your note. First you went to your bank and they wouldn't buy it nor did they have any information about the selling process. Next, you asked your friends and one said 'Find a Note Broker'. So, you searched on the Internet and found a million web sites all purporting to be able to buy your note. You talked with a few but didn't get any satisfaction nor any return calls. Now the frustration sets in.

Here's how the Note business works.
1. Notes are purchased by seasoned investors seeking long term returns on investment.
2. A note is valued according to the long term yield to the investor.
3. The note yield is determined by the Interest Rate, the FICO credit score of the payor, the term of the note, the payment schedule and the 'terms' of the note.
4. Your note can be purchased by an investor based on his/her required note type, note criteria and required yield.
5. Note investors specialize in different types of notes. Some buy only 1st Deed of Trust Real Estate Notes or Mortgages, some buy only Business Notes.

To make a long story short... you don't know if the investor you are talking to is a Broker or an Investor or both or what type, criteria and yield he/she demands. Frustrating. Now you think all note investors and brokers and the whole note buying industry is sleasy, unethical, unprofessional and worthless. Well, I'll admit that part of that is true but REAL Investors and REAL Brokers are there, honest, professional and provide a valuable service. More on this in another article.

This is what you need to know and do regarding your promissory note.
1. The value of your note begins when and how you construct the note. When constructing your note, assume you will want to sell it within the first year. If constructed properly and professionally, it will have high value. Professionally means using the services of an experienced Business or Real Estate attorney to construct your Note. Never use one of the simplified Note Forms available anywhere. Think about it... why do you think Real Estate Lenders use exqusitie, complex, complete Loan Documents that are constructed for their own lending criteria?
2. The Note principal amount must not be more than: (a) 80% of the sales price of the Real Estate if it's a 1st Deed of Trust or 20% if a 2nd Deed of Trust and the total of a 1st and 2nd should never exceed 80%. (b) 67% of business sale price.
3. The payor's (the person(s) responsible for the performance (payments) of the Note, FICO credit score must be above 650.
4. The Note payments should be monthly.
5. The Note terms should be 'Amortized Normally, Payments in Arrears'. Try not to accept an 'Interest Only, Full Balloon at the end' Terms.
6. Your Note should carry an Interest Rate tied to Prime + 2.
7. Your Note should have a Collateralized Personal Guarantee equal to the Principal Amount of your Note.
8. The above are the basics. Your accomplished attorney should know how to construct your note correctly and know who we are so he can contact us at http://www.notefundingcenter.com for knowledge and instruction.

Now, Selling your Note.
1. A reputable Note Broker will take the information about your note, package the information and contact us and other Note Buyers he has brokering agreements with. Some will broadcast your note to everyone on the Net. Broadcasting will devalue your note to almost $0.00. So, if you want to use a broker, ask him to provide you with the list of buyers he is sending it to and does he have agreements in place with all those buyers.
2. A Note Investor/Buyer like us, will request detailed information about your note before we will provide you with a cash-purchase-quotation.
3. You should receive numerous phone and email communications from your selected Broker or Investor prior to providing a cash-purchase-quotation. In our case, after 30 years in the business and 50% referral customers, we must be doing something right, we contact you within 1 day of note information submission and explain the process.
4. You will receive, from us at least, a cash-purchase-quotation to buy your note based on the information you provided.(If you contacted us directly, you would have completed our online Note Information Worksheet which asks all the required information to value your note).
5. Your Note cash-purchase-quotation is usually a Net-Cash-To-You quotation. Sometimes it will be "$XXXXX.XX with your Appraisal and Title.

Bottom Line: Don't get caught up in the excitment of the deal. Keep your conservative head. Heed the above.

This article plus more knowledge is available at http://www.notefundingcenter.com/howto.html