A partial is better when you need less cash than your whole note would raise and you trust the payer to keep paying. A full sale is better when you want the largest check now or want to be finished with the note. Which one wins depends on what you are measuring.
The same note, sold both ways
| Measure | Full sale | Partial of 60 payments |
|---|---|---|
| Cash today | $115,000 | $56,200 |
| Total you receive over time | $115,000 | $179,320 |
| Risk you still carry | None | 108 payments that depend on the payer |
Illustrative example: a note paying $1,140 a month with 168 payments left and about $129,400 owed, priced at an 8% buyer yield. The partial total assumes the payer makes every remaining payment.
The full sale comes out ahead on cash today and on risk, and the partial comes out ahead on total received. “Better” therefore turns on which of those matters most to you this year.
Where the partial’s extra money comes from
A buyer pays less than the payments add up to. That gap grows with distance: the further away a payment is, the less a buyer will pay for it today.
In a full sale you sell every payment, including the distant ones that are discounted hardest. In a partial you sell the near ones and collect the far ones yourself, at their full amount, by waiting, which is why the discount on a partial is smaller in dollars.
What the higher total leaves out
The $179,320 arrives slowly. Only $56,200 of it is paid at closing, and the other $123,120 comes in monthly payments that do not begin for five years, so it cannot help with a bill due now.
It also depends on the payer, since the payments you keep are worth something only if they are made. A full sale passes that risk to the buyer, while a partial leaves the back end with you. And because a partial runs for years under a written agreement, what the agreement says about early payoff and default can matter as much as the price. Those two events are the main risks of a partial note sale, so read the clauses on them before you compare prices.
Questions that tip it one way
- How much do you need? An amount well under the full-sale price favors a partial sized to it, which gives away less of your note. An amount close to the full-sale price favors a full sale.
- How has the payer paid? A long on-time record and real equity in the property favor a partial. Late payments favor a full sale, and can mean that no buyer offers a partial at all.
- Do you want the note back? If you would be glad of the income again later, a partial keeps it. If you are tired of holding the note, a partial only postpones that.
- Does the cash have to be divided? An estate or a divorce settlement needs a sum that can be split now, and a stream of payments that returns in five years is hard to divide.
Keeping the note is also on the list
If you do not need the cash, keeping the note pays more than either sale. On the example note that is $191,520 over 14 years, against $179,320 with the partial and $115,000 with the full sale. Every sale costs you something, and the reason to pay that cost is that money now is worth more to you than money later. If it is not, the answer to whether to sell your note or keep it is to keep it.
Putting your own figures in the table
An example cannot settle this for your note. You need a full-sale price and a partial price quoted on the same day, from more than one buyer where you can. If you would like us to gather them, send us your note details and ask for both structures.
Then fill in the three rows above with your own figures, in the way the side-by-side comparison of a partial and a full sale does for the example note. If cash today and risk both point to the same column, the choice is made. If they point to different ones, let the amount you need this year decide.
Related questions
Does a partial always pay more in total than a full sale?
Only if the payer keeps paying. The higher total counts the payments you keep, and those are not certain. If the payer defaults after the note returns, the total you collect could be lower than the example suggests.
Can I start with a partial and sell the rest later?
Yes, if a buyer will take it. Once the note comes back you can sell another block of payments or the whole remaining balance. Selling the rest while the first partial is still running is harder and depends on your agreement.
Which do note buyers prefer, a partial or a full sale?
It varies. A full sale is simpler to document, and some buyers offer nothing else. Others like partials because their exposure to one payer is shorter. That is one reason to hear from more than one buyer.