Bid-ask spreads on performing notes

[Jordan P.]

I'm currently getting my education in note investing and built a little financial model to run performing note deals through and develop offer pricing using my cost of capital plus risk tolerance based on various characteristics of the deal: Lien position, borrower credit, payment history, asset LTV, seasoning, loan tenor, etc. etc. Then compare my theoretical offer to the listed asking prices (looking mostly at FCI listings).

For the active brokers, buyers, and sellers out there: is there a typical bid-ask spread that is generally observed based on certain characteristics of the note? Or does it vary widely even for notes with similar risk profiles? Said differently, I feel comfortable with the rate of return I'm willing to accept given a certain set of risks, but I don't know if that return is realistic relative to the deals getting done everyday. It makes sense that the riskier you get as you approach non-performing notes, the wider the spreads will be, but even on relatively "safe" performing notes (first position, big equity, high FICO, well-seasoned payment history, etc.) my required returns are 50-100 bps above the offer price, which translates to 4-9% below ask (aka thousands of dollars). And that spread widens as the risk increases (up to 600+bps). Is it typical for sellers to throw out optimistic prices and then be negotiated down, or would my theoretical offers simply be ignored and/or laughed at and so I should recalibrate my expectations?

Any insight from the pros is appreciated!