People considering selling their annuity or structured settlement are usually in a quick need of a cash lump sum. Whether they need the money to cover medical bills, make home mortgage payments, buy a new car, send a kid to college, whatever it may be. You generally need money and you need it fast. In a hurry, a person will usually call a number they find in a TV commercial or internet search and agree to the first annuity or structured settlement buy-out offer they receive. This is often a mistake. Funding companies are vicious competitors and by obtaining multiple bids from multiple companies you will earn a far better rate. The first offer will often not be the best offer. So, practice patience when evaluating offers. Get multiple bids. Shop around. Make them compete to win your business, and do not rush into the first offer you receive.
2) Not keeping the transaction all business
One trick any good salesman employs is to build personal rapport with a prospect. This isn't necessarily a bad thing. It's good to be friendly with the people you do business with. However, my advice with these transactions is to keep the dealings all business. Don't let them in to why you need the money, your personal problems, nothing. You don't want them to discover that you're in great need of the money, or worse, desperate for cash. Weakness is often taken advantage of. By keeping a professional attitude and making them realize that you're looking for the best offer and you're in no rush to sell until you obtain an offer you find acceptable you change the sales dynamic to your favor.
3) Selling part of your annuity or structured settlement without regard to future payment stream
Believe it or not people forget that when selling only a portion of their annuity or structured settlement they reduce their future payment stream. So when the next payment comes they often realize that they can't live off that monthly or annual amount and are forced into selling more. Do the math before-hand. Make sure the reduced payment stream after selling a portion is enough to sustain your current lifestyle needs.
4) Not seeking professional advice
Talk to your lawyer and accountant before taking any deal. Find out all tax consequences of transaction. Run all contracts by a good attorney before signing. The little it costs to obtain professional tax and legal advice could save you a lot of money and trouble down the road.
To recap: Talk to multiple funding companies, keep it professional, understand reductions of payment streams if you're selling just a portion and talk to both an account and a lawyer to advise you through the transaction.
