FREQUENTLY
ASKED QUESTIONS
Factoring Questions
Real Estate Note
Questions
What type of notes do you buy?
NCC buys literally all types and sizes of seller financed or institutionally
originated notes.
[Top]
Do you only buy notes?
No. NCC,
through strategic alliances with industry leaders can work with you
on account receivable factoring, medical receivable factoring, structured
settlements, lotteries and prize winnings, future income from partnership
buyouts, merger and acquisitions, etc. At this site you will find worksheets
and/or applications for just about everything we do.
If you're collecting
payments from something that you don't see
information on simply send us a brief description by e-mail and we'll
let you know if it's something we can assist with.
[Top]
What if I have something I don't find at your site?
Submit
a brief e-mail and we'll let you know if it's something
we can work together on.
[Top]
How much is my note worth?
The value
of future payments are based on a variety of factors such as the credit
worthiness of the Payor, Payor equity, seasoning, location, collateral
(if any), etc.
[Top]
Is it necessary to sell the entire note to get cash?
Absolutely
not. This is likely the most misunderstood aspect of our industry. A
Full purchase of the remaining payments is only one way to pull cash
out of a note. In fact ITS THE WORST way to go as the further into the
future we have to wait for our return on investment, the less valuable
those future payments are and the greater the discount will be.
[Top]
What options do I have if NOT a full sale?
Depending
on your actual cash requirements, a partial sale or partial will likely
be better economically. In a partial, only a calculated number of remaining
payments are assigned to generate exactly the amount of cash needed
right now. The seller retains future income from the payments NOT touched
at this time.The seller also may decide to sell these future payments
at a later date, should your financial situation dictate.The process
is a simple one and is handled in house by NCC's closing department.
E.g.. A client has
a seller financed real estate note with ten years, or 120 payments of
$1,100 per month remaining. The approximate market value for the entire
120 payments, all things being equal, is approximately $73,671.86. However,
the seller's actual cash NEEDS at this time is only $25,000. It would
be silly for the seller to give away cash in the future if not actually
required at this time. The seller agrees to a 26 month partial.
Seller assigns
the next 26 monthly payments to NCC for the
approximate $25,000 required. Seller retains the final 94 payments.
When the 26 payments assigned are received by NCC, the note reverts
back to the seller. Seller has 94 payments or another $103,400 in future
income to receive.
Most importantly
the seller may elect to sell MORE of the remaining
94 payments should the sellers financial situation dictate. In this
fashion the seller receives exactly the amount of cash required right
now, and retains over $100,000 in future income from the payments NOT
touched at this time.
Summary: Seller
receives $25,000 now, another $103,400 in future
income for a total of $128,400 in income over the life of the note.
Compare this to liquidating the note in its entirety for $73,671.86
and the benefits are obvious.
[Top]
How long does the process take?
General
time to fund on a typical seller financed note is three to four weeks,
all things being equal.
[Top]
If I sell my note, how will that effect the party making the
payments?
The FULL
or PARTIAL sale of your note has no effect on the party
making the payments. The only thing that will change is where he sends
the check each month.
[Top]
Are there any costs I should expect?
On smaller
transactions where our investment is below $100,000,
where all pertinent documents have been properly recorded, NCC typically
pays closing costs. On large note sales exceeding $100,000 the seller
will be responsible for certain closing costs. Every transaction is
different and costs associated with the transaction will be discussed
once we have reviewed the deal and you have decided to move ahead.
[Top]
How long does it take for a factoring deal to put together?
Once our
two page application, Articles of Incorporation and Aging Report is
received, reviewed and approved, it takes approximately two weeks to
assemble the paperwork. At that point, funds are advanced within 24
hours of receipt of the invoice.
[Top]
Are there costs involved to set up the factoring relationship?
Once we
have tendered a Letter of Intent to you and you accept,
there is a one time UCC and Administration Fee between $250 and $500,
depending on the size and scope of the transaction.
[Top]
