Buying Notes - The Art of Bidding

in Note

I wanted to share with you a specific example of someone buying notes. They were approaching the bid process as a Science, but missing the part about the "Art" of it.

You see, if relationships didn't count for anything, and if the principle of High-Bid-Wins always applied in every single note buying situation, I wouldn't have worried about my friend who was bidding on a commercial loan pool on DebtX (an online bidding platform for non performing notes).

But because a high bid does NOT always win, then I do worry about my friend bidding on that DebtX note
pool. Why?

Buying Notes - Establishing Credibility w/ Your Buyer

Because if he's not talking to the Seller, and doesn't know the Seller (or the rep at DebtX that manages his account), then he's not dealing with a full deck - he's not playing all his cards right.

Why does this matter to you?

Because you may be the equivalent of my friend bidding on that real estate note pool.

And if you ever are in that situation, you're going to want to engage your seller so that you can improve your chances of winning the bid

Winning bids in any market, but especially in this market, is not just tied to the price that you're willing to pay for a note or a pool of notes.

It's tied to your ability to demonstrate that you're a trustworthy and credible counter-party (fancy name for a note buyer), who can deliver when and how you say you will.

Buying Notes - Highest Bid Does Not Always Win

As former GMAC traders Matt Kennedy and Mike Mand pointed out in a recent defaulted mortgage discussion I had with them in our Private Access Club:

And their "BEST" relationship was actually a note broker who ended up calling them almost once a day with
information and news about other trades and deals that were happening in the industry.

No matter if you're bidding on a single note or on a pool of notes, take the time to develop and build a relationship, and you will see your success rate improve. Guaranteed.

Talk to you soon,

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Dean Engle has 1 articles online

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Buying Notes - The Art of Bidding

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This article was published on 2010/04/01