Note for sale - what's a fair price?

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Posted by Joshua Martino on August 05, 2008 at 08:45:24:

I noticed the following note up for auction and I'd like to use it as an exercise to learn how to evaluate what's a fair price, what's a good deal.

http://www.bid4assets.com/auction/index.cfm?auctionid=390021

Loan Information
Current Balance $39,400
Rate 8%
Payment Amount $300
Number of Original Payments 314
Number of Payments Remaining 314
Next Payment Due Date 08/01/08

Min Bid is at $19k. Given the last sale, I wouldn't consider the last county assessed value ($89.6k) as too relevant.

zillow.com shows the most recent sale 8/30/07 for $48k - http://www.zillow.com/HomeDetails.htm?zprop=1103965

Other than $39.4k/$48k leaving about 18% equity I have no relevant info on the payor at the moment.

Quickly going over the note details with my calculator, the monthly payment should be exactly $299.89, so it checks out.

Let's say I'd like to buy this with 18% discount (is that the right terminology?). If I pay $19,806.49 I should have exactly 18%.

Since the min bid is $19k, let's say I'd get it at that price - it'd be @ 18.80%.

Thoughts? Are my numbers correct?
What questions (other than the payor's payment history) would be relevant to ask of the note seller that would help with this decision?

Regards, Joshua

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