The interest rate and the down payment were fixed the day your note was signed. What you can still change is how certain the note looks to a buyer, and certainty is what they pay for: proof of payments, clean documents and more than one bidder do most of the work.
Some of the steps below take an afternoon. Others take months and only make sense if you are in no hurry. They are sorted that way, and the things that are not worth your money come near the end.
What you are trying to move
A buyer prices a note by picking a yield, the yearly return they need on what they pay you, and then finding the price that delivers it. Every doubt pushes that yield up and the price down. The doubts gather around the payer (will they keep paying?), the lien (can it be enforced?) and the property (what is it worth?). They are the same three that run through the guide to what your note is worth.
Raising your note’s value therefore comes down to removing doubts. Each step either proves something a buyer would otherwise have to assume or fixes something they would otherwise have to price.
| Step | Doubt it removes | Time needed |
|---|---|---|
| Complete document file | Whether the lien can be enforced | Days |
| Bank proof of payments | Whether the payer really pays on time | Days |
| Taxes and insurance current | Whether the property is protected | Days to weeks |
| Recording and corrections | Lien position and ownership | Weeks |
| Loan servicer | Whether the record is independent | Months to build a history |
| More seasoning | Whether the payer will keep paying | Months |
| A second and third offer | Whether one buyer’s price is the market’s price | Days to weeks |
What you can do this week
Assemble the file before anyone asks
Gather the note, the recorded mortgage or deed of trust, the closing statement from when you sold the property and any title policy. A buyer who receives a complete file on day one prices what they can see, while a buyer who receives it in pieces prices what might still be missing. For what each gap costs, see how paperwork quality affects your note’s value.
Prove every payment
Print the bank statements that show the payer’s deposits, going back as far as you can, and highlight each one. If payments came by check, keep copies. The aim is a history a stranger can verify without taking your word for it.
Confirm taxes and insurance
Call the county to check that property taxes are paid, and ask the payer for a copy of the current hazard insurance policy naming you as the lender. Unpaid taxes can become a lien ahead of yours, and an uninsured house puts the property behind the note at risk. A buyer will check both, so it is better to find a problem yourself and have it fixed than to have it turn up in their review.
What takes a few months
Let the note season
Seasoning is the number of payments the payer has made since the loan began. A new note has no track record, so a buyer has to assume more risk, and each on-time payment is evidence against that assumption. The effect is largest on a note that is only a few months old. Seasoning and payment history goes into how buyers read it.
Move collection to a loan servicer
A loan servicer is an outside company that collects the payments, keeps the records and sends the year-end statements, for a monthly fee. Its payment history carries weight with a buyer because you did not write it, and it takes you out of the awkward job of chasing a late payment. If you plan to sell in six months or a year, starting now gives you a third-party record by then. Whether you need one at all is a separate question, answered in do I need a loan servicer to sell my note.
Fix what is broken in the documents
Record anything that was never recorded. Correct a misspelled name or a wrong legal description. If you and the payer changed the terms informally, have the change written up and signed. An attorney or a title company can handle these repairs, and they remove the kind of problem that cuts an offer late in the process.
Deal with late payments in the open
If the payer has slipped, talk to them. A payer who catches up and then pays on time for several months looks very different from one who is behind today. Keep a written record whenever you waive a late fee or accept a short payment, because an unexplained gap looks worse to a buyer than an explained one.
Changing the terms of the note
A buyer would pay more for a note with a higher interest rate, a shorter term or a lump-sum paydown of principal. None of these is yours to impose, because the payer agreed to the note as written.
Sometimes there is a trade both sides want. A payer who asks for something, such as an extension on a balloon or a release of part of the land, may agree to a higher rate or an extra principal payment in return. Any change belongs in a signed, written modification, and lending rules can apply to changes on a home loan, so have an attorney prepare it.
Leave a payer who is paying on time alone. Pressing them into new terms for the sake of a sale puts at risk the most valuable thing about your note, which is their reliability.
What is not worth paying for
- An appraisal before you have an offer. Buyers order their own valuation during their review and may not rely on yours.
- A new title policy. The buyer’s title work is part of the same review.
- An upfront fee to list or market your note. Finding out what a note is worth should not cost you anything, and our quotes are free.
- Waiting, when you need the money. Six more months of seasoning helps a young note. On a note with years of history it adds little, and the cost of waiting may be higher than the gain.
The sale itself
Everything above improves the note. How you sell it matters as well.
Start by asking more than one buyer. They want different yields and read the same file differently, so a single offer tells you what one buyer thinks and several tell you what the note is worth. The reasons are set out in why note offers differ from buyer to buyer.
Then ask whether a partial would suit you. A partial purchase is the sale of a set number of payments, with the rest of the note returning to you. Buyers discount distant payments hardest, so selling only the near ones costs you less of the note, and if you need a set amount of cash you can sell only enough payments to raise it. A note with few payments left or an unreliable payer may not be offered one. The comparison with a full sale, in dollars, is on partial vs full note sale, side by side.
Fix first, or price first?
You do not have to finish this list before asking for a price. A price on the note as it stands shows which steps are worth the trouble: if a buyer marks the note down for a thin payment record, that is the fix to make, and if nobody mentions the documents, the document work is done. Get a price on the note as it is today and ask each buyer what would raise their number. Then decide whether to make the fix, wait, or keep the note.
Related questions
Should I wait a year before selling my note?
Only if the note is new and you do not need the money. A longer record of on-time payments gives a buyer more evidence on a young note. On a note that already has years of history, another year changes little, and you carry the payer's risk while you wait.
Does using a loan servicer raise my note's price?
It can, because a servicer's payment history is independent proof. The effect comes from the record it builds, so it helps most when it has been in place for some months before you sell.
Can I raise the interest rate on my note to make it worth more?
Not on your own. The payer would have to agree, in a signed modification. That sometimes happens when the payer wants something in return, such as an extension. Have an attorney prepare any change.