The property is what stands behind your note, so its type changes the price. A buyer looks at how easily it could be valued and resold. A note on an owner-occupied house generally draws the strongest offers, while land, mobile homes and commercial property are priced with more caution.
Why a note buyer cares about the real estate
A note buyer wants payments and has no wish to own the property, but they have to plan for the day the payments stop, when the property becomes the way they get their money back. So they ask whether it can be valued with confidence. A house on a street of similar houses has recent sales to compare against, and an unusual property has few or none. They ask how quickly it could be resold at a fair price, which comes down to how many people would want it. And they ask how attached the payer is, since people fight hardest to keep the place they live in.
Weak answers raise the yield a buyer asks for, the annual return they need on the price they pay, and a higher required return on the same payments means a lower offer.
How common property types compare
| Property securing the note | What a buyer weighs |
|---|---|
| Single-family home, payer lives there | The strongest case. Easy to value, wide resale market, and the payer’s own home is at stake. |
| Single-family rental | Still solid, but the payer depends on rent coming in and has less personal attachment. |
| Condo, townhouse or small multi-unit | Generally well received. On condos, buyers look at association dues and the building’s finances. |
| Mobile or manufactured home with land | A narrower group of buyers. Whether the home is legally part of the land matters a great deal. |
| Mobile home without land | Hard to place. The home can be moved and tends to lose value with age. |
| Vacant land | Priced cautiously. It produces no income, is slower to resell and is easier for a payer to walk away from. |
| Commercial or mixed-use | A specialist market. Value depends on the tenant or business as well as the building. |
Read the table as a general order. Property type is one of several factors in what your note is worth, and a strong note on land can beat a weak note on a house, for the reasons below.
Condition, location and use
Within any type, the particular property matters. A buyer may have someone look at it from the outside before funding, and deferred repairs, an unfinished build or an empty house all lower the value they are willing to rely on. Location works through resale: the same house is easier to sell in a town with steady demand than in a remote area with few sales a year. Occupancy runs from owner-occupied at the strong end to vacant at the weak end. For land, legal road access, water, power and whether the lot can be built on all change what a buyer thinks it is worth.
Equity can offset a weaker type
Equity is how much the property is worth beyond the debt on it. A note on vacant land where the payer put down a large share of the price and has paid on time for years gives a buyer a wide cushion, and that can outweigh the property type. The reverse also holds, so a note on a good house with almost no equity behind it will price below what the house alone would suggest.
Buyers specialize by property
A buyer who only purchases notes on houses may decline a land note, or bid low to be safe, where a land specialist would price it on its merits. That is the main reason offers on less common property types sit so far apart, and why it matters who your note is shown to. When you ask for a price, name the property type at the start so the note can be put in front of buyers who work with it. We have separate pages on vacant land notes, mobile home notes and commercial mortgage notes that describe what each kind of buyer looks for.
What to send about the property
Doubt about the property costs you money, and you can remove some of it by sending what you have:
- The full property address and a plain description of what is there.
- Recent photos, if you can get them without disturbing the payer.
- Any appraisal, tax assessment or recent sales of similar property nearby.
- For a mobile home, the title or paperwork showing how it is attached to the land.
- For land, a survey and anything showing access and utilities.
Send whichever of these you have and say which you do not. Condition deserves a line of its own, since an address tells a buyer the type but nothing about repairs, and property type, condition and note value are judged together.
Related questions
Can I sell a note secured by vacant land?
Yes. There are buyers who specialize in land notes. Expect them to look closely at the down payment, the payment record, road access and whether the lot can be built on.
Does it matter if my payer rents the property out?
It can. A buyer sees slightly more risk when the payer does not live there, because the payment depends on rent and the payer has less personal reason to hold on. A strong payment record reduces that concern.
Will the buyer go inside the property?
Expect an outside look. The payer is living in or using the property and the buyer has no right to walk through it, so they rely on what can be seen from the street and on sales of similar property nearby. Recent photos from you can help where the outside view does not tell the full story.