Did you know...

If you finish giving your price and options to the note holder and your prospect hesitates at the end, the worst thing you can do is try to recover by talking about the benefits.  Back off and listen for an opportunity to close later.

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President's Corner

       Hope your new year is off to a great start! I recently read a story about a farmer had a dog that used to sit by the roadside waiting for vehicles to come around. As soon as one came he would run down the road, barking and trying to overtake it. One day a neighbor asked the farmer "Do you think your dog is ever going to catch a car?" The farmer replied, "That is not what bothers me. What bothers me is what he would do if he ever caught one."

       Many people in life behave like that dog who is pursuing meaningless, unattainable and even unrealistic goals.  In the note business if you just take one step at a time, one note holder at a time and one transaction at a time your goals become that much more achievable. Have you heard the quote, “Life is hard by the yard, but by the inch, it's a cinch.” by Gean Gordon? It is so true, especially in the note business.  Don't give up, just take things one at a time as they come and eventually things will work out in their own time.

      Remember, Success Demands Action! Keep on marketing, it’s going to work! TWITA!

Question of the Week

Q - Hi Jeff,

          Thanks for the great note business newsletter. Can you tell how to determine the balance of a note if the buyer pays more than the scheduled payment every month?  For example,

   Amount of Note: 36,000.00

   First Payment: Sept 1, 2013 (17 Payment 163 remaining)

   Monthly payment: 344.00 per the note, buyer pays 350.00 monthly

   Term: 180     Interest Rate: 8%

The note seller calculated 4 months x 6.00 dollars for 2013 and 12 months X 6 for 2014. And now he received January's payment (1 month X 6.00 dollars) How would you handle this situation? How would you determine the balance? The note seller stated that he subtracted 24 from the principal at the end of 2013 and then he subtracted 72 dollars at the end of 2014. Confused… Thanks for your help.

                                                                 ~ Kevin

A - Hi Kevin!

          Thanks for the email! What the seller did isn't exactly accurate but it's a good guess-timate.  The way we would do it is to enter it into an amortization program (we use T-Value) and it will give us the exact current balance. On the calculator if they have made 17 payments of $350 instead of $344 it would look like this:…First the stated note terms are this:

     N = 180

     I = 8

     PV = -36,000

     PMT= 344.03

     FV = 0

The balance after 17 payments at the stated $344.03 is this:

     N = 163

     I = 8

     PV = -34,133.87

     PMT= 344.03

     FV = 0

If they paid $350.00 for the last 17 months we have to re-amortize it then solve for the balance like this:

     RE-amortize:

         N = 174.20

         I = 8

         PV = -36,000

         PMT= 350.00

         FV = 0

solve for new balance after 17 payments 174.20 – 17 = 157.20:

     N = 157.20

     I = 8

     PV = -34,026.86

     PMT= 350.00

     FV = 0

So you see just subtracting $72 isn't quite accurate because it does not account for the amortized portion of the ratio between interest and principal in the amortized payments. Hope this helps!

                                                                   ~ Jeff

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