You sold a house, a few acres or a tract of timber in Alabama and carried the financing. We take that note to competing buyers and hand you the worksheet behind each offer.
Where an Alabama note holder loses money before a second buyer is ever asked.
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 saleSeller financing in Alabama turns up in two quite different settings. One is the cities: Birmingham and its older suburbs, Huntsville, Montgomery and Mobile, where an owner sells a modest house to someone a bank turned down and carries the loan personally. The other is the country, where timber tracts, hunting land, small farms across the Black Belt and lots near Lake Martin or Smith Lake change hands with the seller acting as the bank. A manufactured home on a few acres can be the collateral, and so can property near the coast in Baldwin County.
If the monthly payments from a sale like that come to you, you are the note holder, and those payments can be sold for a lump sum, either all of them or a block of them.
Your note is the payer’s promise. What ties that promise to the property is a second document, recorded in the county where the land lies. In Alabama it is commonly a mortgage. A deed of trust is possible but seen less, and you can tell a mortgage from a deed of trust by the parties named on the first page, since a deed of trust adds a trustee.
Alabama mortgages commonly carry a power of sale, a clause that lets the holder sell the property after a default by following steps set in state law, generally without a full lawsuit. A court foreclosure is also available. Alabama law gives a borrower certain rights to reclaim the property after a foreclosure sale as well, known as a right of redemption. Not every state gives borrowers one, which is among the ways selling a note differs from state to state. Who can use that right, and for how long, are questions for an Alabama attorney or a local title company, because the rules have been revised before and can be again.
A note buyer decides what annual return they need on the money they pay you, then pays the amount today that your remaining payments will turn into that return. That amount comes in under the balance your payer owes.
An out-of-court route to the property lowers what a buyer expects a default to cost, which helps the price. The redemption right pulls a little the other way, since a buyer who takes a property back may not be able to resell it with certainty straight away. Both count for less than the payer’s record, the equity in the property (its value above what is owed on it) and whether your lien is first in line to be paid.
Rural collateral gets a harder look, so say what secures the note when you ask us to price your Alabama note. A buyer wants to see recorded access to the tract, and on a manufactured home they ask whether the home has been legally joined to the land or is still titled separately, the way a vehicle is. Expect the questions that come with any mobile home note: how the home is titled, what it stands on and who owns the ground.
If you cannot find the title to a manufactured home, say so at the start. It is the first thing a buyer asks for on that kind of collateral, and a missing one is easier to deal with before an offer than after.
Alabama notes are commonly secured by a mortgage, and those mortgages commonly contain a power of sale. Deeds of trust exist but are seen less often. A buyer reads your recorded document to see which one you have.
Yes. What matters is where the property sits, and the sale can be closed by mail through a title company or closing attorney. Your own address does not change the price.
It can. Buyers look at legal access, the size of the down payment, how long the payer has paid and what the land would sell for. Each buyer values land in their own way, so offers can sit further apart than they would on a house in Birmingham or Huntsville. That is a reason to collect more than one.
No. That right concerns what a borrower can do after a foreclosure sale, and it is something a buyer weighs when pricing risk. It does not prevent you from selling a note that is being paid. Ask an Alabama attorney how it applies to your document.