You sold a property and carried the financing. We take your mortgage note or deed of trust to competing buyers and show you how each offer was priced.
Four things that go wrong when one buyer sets the price.
The same worksheet comes with every offer.
| Remaining balance | $129,400 |
|---|---|
| Payments left | 168 |
| Buyer’s target yield | 8.0% |
| Purchase price | $115,000 |
| Discount from balance | 11.1% |
| Our fee | shown on every offer |
| Sell the whole note | Sell 60 payments | Keep it | |
|---|---|---|---|
| Cash today | $115,000 | $56,200 | $0 |
| Payments still coming to you | None | 108 payments of $1,140 | 168 payments of $1,140 |
| Total you receive | $115,000 | $179,320 | $191,520 |
| What you give up | Every future payment | The next five years | A lump sum now |
Illustrative example. Totals add up the payments as scheduled; they assume the payer keeps paying and are not adjusted for the value of money over time.
The promissory noteThe mortgage or deed of trustA payment historyThe closing statement from the saleYou sold a house, a duplex or a piece of land, and the buyer pays you over time in place of a bank. The paper from that sale is a real estate note: a promise to pay, secured by the property. The promise is the promissory note your buyer signed. The security is the mortgage or deed of trust you recorded, which is the lien that lets you take the property back if they stop paying.
Those two documents travel together. When you sell, the note is endorsed over to the buyer and the lien is assigned to them in the county records. Your payer keeps the same rate, the same payment and the same payoff date, and the only change on their side is the address the payment goes to.
Of all the types of notes you can sell, a first-lien note on real estate draws the widest field. The collateral is easy to value and it sits in a fixed place. Recovering it after a default follows a known legal process, though that process differs from state to state.
A wider field helps you because of how price is set. The higher the return a buyer wants on their money, the less they pay for the same payments, and a buyer who knows two others are looking at the same file has a reason to ask for less. That is the case for letting us price the note with more than one buyer before you answer a single offer.
The buyer starts with the payments left and discounts them at the return they are aiming for, then adjusts for risk. Equity is the main adjustment: the gap between what the property is worth and what is owed on it. A payer who put down a large deposit and has paid for years has a lot to lose by walking away.
A buyer also compares the price they pay with the property’s value, a ratio that sits alongside equity and is called investment to value. If you want the arithmetic on a sample note, it is in our account of how note buyers calculate a price. The direction is always the same: more equity and a longer on-time record bring the price closer to the balance, and a thin down payment or a short record pushes it away.
A sale can survive any of these, but each one costs more when it turns up during the buyer’s review than when you raise it at the start.
Find the original note, the recorded mortgage or deed of trust, and whatever shows the payments received. Add the settlement statement from your sale if you still have it, since it shows the price and the down payment in one place. With those on the table you can read any offer against the same facts the buyer used.
In most cases less than the remaining balance, because a buyer pays the price that produces their target yield. How much less depends on the interest rate, the payments left, the payer's record, the equity in the property and the lien position. The worksheet that comes with each offer shows the calculation.
Often, yes. A note with late or stopped payments is called non-performing. It sells at a deeper discount because the buyer takes on the work and the risk of collecting. Tell us where things stand and we will show you what buyers offer.
Buyers normally want the original promissory note and a copy of the recorded mortgage or deed of trust. If the original note is lost, say so at the start. It can sometimes be worked around, and it affects which buyers will look at the note.
In most cases no. The person paying you keeps the same terms and is told where to send payments after the sale. The wording of your own note governs, so we check it for anything that restricts a transfer.