No. Some note buyers only ever quote a price for the whole note. Partials take more paperwork and a longer relationship with the seller, so some buyers avoid them and others offer one only when asked. A buyer who never mentioned a partial has told you about their own business and very little about your note.
Why some buyers only make full offers
A full purchase is a clean deal for a buyer: they pay once, take the whole note and have no further dealings with the seller. A partial costs them time and money in ways a full purchase does not.
It needs a second agreement, for a start. Beyond the usual sale papers, a partial requires a contract covering early payoff, default and the return of the note, and a buyer who has never had one drafted and tested has a reason to stay away. It also lasts for years, with buyer and seller tied together until the note comes back and somebody tracking the payment count and preparing the return.
The money side works against partials too. A buyer with capital to place may prefer one large purchase to a small one that takes the same effort to check. Buyers who resell the notes they purchase find a note with a seller’s interest attached harder to pass on. And if the payer defaults, a partial buyer has your interest to consider as well as their own, which some would sooner avoid.
A full-only buyer can be perfectly honest, in other words, and the offer in your hand may still be the only product that buyer sells.
Buyers who offer partials differ from each other
Among buyers who do partial purchases, the terms vary. Some will buy only above a minimum number of payments or a minimum dollar amount. Some offer straight partials but not split payments. Some price a partial at a higher yield than they would use on the same note bought whole.
The agreements differ most. One buyer’s contract gives you the right to buy the partial back if the payer defaults and divides an early payoff by a clear formula, while another’s is silent on the first point and loose on the second. Two partial quotes at the same price can therefore be quite different deals, which is one reason note offers differ from buyer to buyer on more than the number.
Notes that are harder to place as a partial
Sometimes the note is the reason. A partial leaves the buyer relying on the payer for a set number of years, so buyers look for a note they expect to keep performing.
| Easier to place as a partial | Harder to place as a partial |
|---|---|
| First lien, meaning first in line to be repaid from the property | Second lien behind another loan |
| A long record of on-time payments | Recent late or missed payments |
| Plenty of payments left after the piece being sold | Only a short term remaining |
| Complete, recorded paperwork | Missing documents or unrecorded changes |
| A balance large enough to justify the work | A very small balance |
If your note sits in the right-hand column, a partial may still be possible, but expect fewer buyers and a higher yield. The last row is the least fixed of the five, since the smallest partial you can sell comes from each buyer’s own floor, and a balance one buyer passes on another may still quote.
What to do if you were only offered a full sale
- Ask the buyer directly: “Do you buy partials, and what would you pay for the next 60 payments?” A buyer who does them will have an answer.
- Ask for the yield behind the full offer. You need it to compare that offer with a partial from someone else.
- Take the note to more than one buyer, or send it to us to be priced and say that you want a partial quoted beside the full sale. A single quote cannot tell you what else is available, which is the reason to think about how many offers to get on your note before you accept any of them.
- When a partial quote arrives, read the agreement before the price. A higher price with weak terms can be the worse deal.
Where a broker fits
A broker’s job is to know which buyers do what. Some of the buyers we work with purchase partials and some do not, so a note goes to the ones that suit it, whereas a direct buyer can only show you their own menu. The two are also paid differently, so find out whether you are dealing with a note buyer or a note broker before you weigh what either tells you.
Whether a partial can be placed depends on the note itself, and the table above is a fair first check of where yours stands. If your note sits mostly in the left-hand column and the only offer you hold is for the whole of it, the missing partial is a question to put to other buyers before you treat it as settled.
Related questions
Why was I only offered a price for my whole note?
It may be the only thing that buyer purchases, since a full purchase is simpler for them. Ask directly whether they buy partials, and take the note to other buyers as well.
Is a buyer who refuses partials a bad buyer?
No. A buyer can be sound and still purchase whole notes only. It means you need a second source if you want to see a partial priced.
Will every note qualify for a partial?
No. Buyers look for a payer with a steady record, enough payments left and complete paperwork. A second lien, recent late payments or a short remaining term all make a partial harder to place.