There is no set number. A note can be offered for sale as soon as it exists. What changes with time is the price and how many buyers are willing to bid, because every payment the payer makes is more evidence that they will keep paying.
Why no rule exists
Nothing about a private note switches it from unsellable to sellable on a certain date. Each buyer sets their own standard for the payment record they want to see, so one may price a note that closed last month while another passes until the payer has made a longer run of payments.
Buyers call this seasoning: how long the note has existed and how many payments have arrived on time. A note with a long clean record is seasoned, and a new one is unseasoned, or green. Our page on seasoning and how payment history changes the price goes into how a ledger is read.
What each payment adds
On the day a seller-financed sale closes, a note buyer can see the down payment, the payer’s credit and the terms. After several payments they can see something more useful, which is that the money actually arrives.
That evidence shows up in the yield, the annual return a buyer needs on what they pay you. A proven payer is a lower risk, so the buyer can accept a lower return, and accepting a lower return on fixed payments means paying more for them.
The effect is strongest early. The first run of on-time payments turns an untested note into a tested one, and later payments keep helping by smaller amounts because the pattern is already established.
Notes at different ages
| Stage of the note | What a buyer has to go on | What it means for you |
|---|---|---|
| Brand new, few or no payments | Down payment, credit, the terms and the property | Fewer buyers will bid, and they rely heavily on equity and credit |
| A short run of on-time payments | The start of a record | More buyers will look, though the record is still thin |
| A long clean record | Direct proof of how this payer treats this debt | The widest field of buyers and the least doubt in the price |
The table shows a direction only. Where each stage begins and ends differs from buyer to buyer, which is why there are no month counts in it. To learn where your own note falls, ask for a price on it as it stands and see what comes back.
What can stand in for a short record
If you need to sell early, the other things that decide what your note is worth make up some of the ground. A large down payment helps twice: the payer has real money to lose, and the note starts with more equity, meaning property value above what is owed. Strong payer credit matters more than it would later, because with little record on your note a buyer leans on the payer’s record elsewhere. Clean paperwork, such as a properly drawn note, a recorded security document and a title policy, removes questions a buyer would otherwise price in. And the payments you do have count for more when a bank statement or servicer’s ledger shows the date each one arrived. There are further steps in how to raise the value of your note before you sell.
If you have not created the note yet
Someone about to sell a property with seller financing, and expecting to sell the note soon after, can set it up with a buyer’s eyes in mind: a solid down payment, standard documents, and recording at closing. Laws on seller financing vary by state and by the kind of property, so have an attorney or title company prepare the documents.
Deciding when to sell
Waiting helps if you can afford it, since each clean month strengthens the record and you collect the payments in the meantime. If you need cash now, a new note can still be priced, and selling a note that is less than a year old explains what to expect. It is also worth asking about a partial, where you sell only a set number of payments. That raises money today, and the note that comes back to you later carries a longer record than it has now.
Count the payments made so far and gather proof of each one. If a price quoted today is close to what you need, there is little to gain by waiting. If it falls well short, ask the buyer what length of record would change it, then decide whether you can hold the note that long.
Related questions
Can I sell a note the same day I create it?
Some buyers will price a brand-new note, and the purchase can sometimes be arranged alongside the property sale itself. Fewer buyers take part, and they rely on the down payment, the payer's credit and the property in place of a payment record.
Do payments made in cash count toward seasoning?
Only as far as you can prove them. Buyers want evidence such as bank deposits, cancelled checks or a servicer's ledger. A payment you cannot document may be given no weight at all.
Does seasoning start over if I change the note's terms?
It can. A buyer may treat a modified note as a new one and look mainly at the payments made since the change. Ask before you modify a note you expect to sell.