Episode 33: Creating a No-Risk Bid

Most note buyers make an offer and hope for the best — but a no-risk bid protects you before you ever spend a dollar on due diligence. In this episode, we break down how to structure an offer that works whether you're competing with other buyers or sitting across from a seller who's never sold a loan in their life.

🔍 What you'll learn: 

✅ Why a complimentary portfolio analysis removes all pressure and opens doors with lenders who aren't actively selling yet
✅ How to use contingencies in your letter of intent so the deal can never turn into a surprise loss 
✅ The key difference between bidding in a competitive process vs. working an exclusive seller — and why the strategy has to change completely 
✅ Why coming in conservative on pricing builds more trust (and more deal flow) than leading with your best number 
✅ How the under-promise and over-deliver principle turns a single trade into a long-term seller relationship

This program is for informational purposes only and should be independently verified before taking action.

Transcript

SPEAKER_00 0:00

Welcome to the show, where you'll learn how to invest in mortgage notes, the savvy real estate investor's secret weapon to create cash flow without tenants and property acquisitions for pennies on the dollar. My name is Robert Haitha, founder of Fick Notes, and my mission is to make note investing ethical, profitable, and accessible for you. In every episode, we're democratizing the industry to put these powerful Wall Street assets into the hands of mainstream investors like you. So without further ado, let's get into the show where you're in good hands with my AI clone. Let's go. This program is for informational purposes only and should be independently verified before taking action. There are two people in every note transaction who need to feel safe about making a move, the seller and the buyer. And here's the thing a well-structured bid protects both of them at the same time. That's what a no-risk bid is really about. On the seller's side, you're framing your offer as a complementary portfolio analysis. You're not asking them to commit to anything. You're just saying, let me look at what you have and tell you what it's worth. That's a genuinely useful service, especially for lenders who aren't actively selling loans yet. It removes all the pressure and creates goodwill before any transaction even starts. On your side, as the buyer, the protection comes from how you structure the formal offer, your letter of intent. The LOI documents your price, your terms, and most importantly, your contingencies. A contingency basically says this offer is subject to verification, that if the asset turns out to be different from how it was represented, when I complete my due diligence, I have the right to adjust or walk away. That clause alone is what separates a professional buyer from someone who's just winging it. Now, the way you approach a bid is going to be very different depending on who you're selling to or more accurately, who you're buying from. There are two distinct types of sellers in this market and they require completely different strategies. The first is a professional seller. These are institutions, funds, and advisory shops that regularly liquidate loans. They know what their assets are worth. They have a pool of buyers competing for the same tape, and they run a structured process. When you're in that environment, your job is to put your best foot forward. You need to be competitive. There's typically a seven-day window to submit your indicative offers and then another 30 days or so to complete your due diligence and fund the deal. In that setting, the LOI is often just a spreadsheet with loan-level prices submitted by email. It doesn't need to be a formal document. What matters is that your numbers are solid and you can close. The second type of seller is what we call an exclusive opportunity, a bank or lender that doesn't regularly sell loans and hasn't yet built relationships with buyers in the secondary market. This is actually where the real upside is. When you find a seller like this, you may be the only buyer in the room. There's no competition. And that changes everything. With this type of seller, the complementary portfolio analysis becomes even more important because they may not even have their data organized in the format you need. Some of these banks will send you PDFs of recent statements instead of a clean spreadsheet. That's actually a good sign. It means they haven't gone through this process before, that you get to be the one to guide them through it, and that inside track is incredibly valuable. You're building a relationship with a seller who's new to the secondary market. The other thing to keep in mind is how you set expectations on pricing. You want to come in conservative. If fair market value might support a price of 60 or 70% of the unpaid principal balance, you don't lead with that number. But you come in much lower, maybe 30% as your starting point for that initial analysis. Not because you're trying to lowball them, but because you want room to overdeliver. If you set high expectations and then can't meet them, you damage the relationship before it even gets started. If you set conservative expectations and then come back with something better, you build trust. That underpromise and over-deliver principle is something we come back to again and again in this business because the relationships are what compound over time. A seller you work with well on one trade will come back to you for the next one, and the one after that. So to bring this all together, start with a complimentary portfolio analysis to add value and build trust with no strings attached. Follow that with a letter of intent that documents your price, timing, and contingencies. And adjust your entire approach from how you price to how formal your documents need to be based on whether you're competing against other buyers or working with an exclusive seller who's new to the market. That's how you build a bid that protects everyone at the table. Coming up next, we're going one level deeper into the numbers. In episode 34, we're talking about how to calculate your maximum bid price, the actual math behind what you should pay for a loan, and how to work backward from your target return to arrive at a number that keeps your deal profitable no matter how the resolution plays out. Thanks for sticking around to the end, and thank you to my trusty Robot and the Fixed Notes team for putting together another episode. If you want to learn more and hang out with the real not AI version of me, join our free school community at school.com slash fixed notes. That's s ko l dot com slash f I x n o t e s. In the meantime, we'll see you in the next episode.