10 golden rules for preparing to buy or sell a mortgage trail book

Buying or selling a mortgage trail book need not be a difficult or angst-ridden process. All buyers and sellers really want is to increase the certainty of a sale proceeding and speed up the time to completion, so as to help avoid any nasty surprises.

With that in mind, here are our top 10 golden rules for selling or buying a trail book.

1. Determine what approvals are required from whom early in the process.

From directors of the selling entity to owners of the trail book, determining who to approach for approvals will give you a head start on affecting the sale.

2. Establish your duties under the aggregation agreement prior to approval of the sale.

The sale of a book is often subject to the aggregator’s approval, so establishing whether you’re obligated to sign up to their aggregation agreement is critical for things to proceed smoothly.

3. Clarify which clients and client files are included within the sale.

A comprehensive client database is a valuable asset, so get clear on which files will be transferred as part of the sale and inspect the records closely before you proceed.

4. Draft an agreed Deed of Assignment to cover the transfer of trail.   

Draft a Memorandum of Agreement or Heads of Agreement containing all the key material terms before engaging lawyers to Draft the Deed of Assignment. Ensuring key commercial terms are properly considered and articulated in advance of legal documentation can save you money – and frustration!

5. Get an independent valuation

Trail books are tricky beasts that are heavily influenced by a range of factors. We recommend entrusting your book to an expert, independent valuer who can analyse these factors and compare them to industry standards so that you can secure the highest potential sale value or mitigate the risk of a purchase.

6. Determine who wrote the loans you are buying or selling.

A word of caution: put strong agreements and restraint provisions in place with employees and contractors so as to minimise the risk of poaching clients and attacking the underbelly of your newly acquired asset.

7. Negotiate the cost of future clawbacks and what retention forms part of the consideration.

No one wants to face a clawback that takes away from their trail income. Avoid this pitfall by agreeing on how you’ll deal with clawbacks early on within your negotiations – after all, it’s key to determining a fair price of purchase.

8. Enquire about relevant paperwork and fees payable before the transfer is effective.  

There’s plenty of paperwork to be done before a transfer can occur – and it comes at a cost. Ask the aggregator about fees payable, the likely timetable and any approvals required so that you can divvy them up between purchaser and vendor.

9. Figure out what insurance is required.

When purchasing a book, make it a requirement that the vendor agrees to invoke the run off PI insurance cover on their insurance policy if they are exiting the industry.  The quantum and duration should be agreed upfront and meet any aggregator or funder requirements.

10. Choose your advisors carefully.  

If you’re a newbie to the trail book game, it’s worthwhile seeking out the assistance of an experienced, specialist advisor that can offer you sage advice or take control of the process from start to finish.

A little experience, astute questioning and thorough preparation can go a long way toward ensuring the best possible. Why not start by taking a look at TrailBlazer Finance’s free trail book valuation calculator to get you started on your buying and selling journey? Or, if you have something more specific in mind and would like some expert advice from a team who has done in many times over, please get in touch on 1300 139 003.

Find out the value of your trail book


Whether you’re a mortgage broker, financial planner, rent roll business owner, accountant or other cashflow business, we can understand and support your specific business goals and needs.

Contact us

Suite 401, Level 4,
59-75 Grafton Street,
Bondi Junction NSW 2022

1300 139 003


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