Alaska sellers carry financing on cabins, remote parcels and homes that banks will not lend on. We put that note in front of several buyers and show how each one reached a number.
Distance and unusual property work against a holder who asks only one buyer.
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 saleA bank will lend on a finished house on the road system in Anchorage, Eagle River or the core of the Mat-Su Valley around Wasilla and Palmer. Beyond that it gets cautious. A dry cabin outside Fairbanks with no running water, an owner-built home that was never quite finished, a recreational parcel on the Kenai Peninsula, a lot reached by boat or floatplane: all of these are hard to mortgage in the ordinary way, so the owner sells on terms and becomes the lender.
That is how Alaskans, and former Alaskans who have since moved south, come to hold a note. The note holder is the person the payments are owed to, and the right to those payments can be sold. A buyer goes by where the property is, so if you have since financed a sale somewhere else, look up that note under its own state.
Pricing starts the same way in every state. A buyer works out what your remaining payments are worth today at the yield they require. The less sure they are of being paid, the higher that yield goes and the lower the offer, which is why offers come in under the balance owed.
In Alaska the doubt is mostly about the property, and it comes down to things a buyer in another state cannot see for themselves. Is there a year-round road, and if the parcel is reached by trail, water or air, is that access legal and on record? What is there for power, for water (a well, or hauled), for septic and for heat? Is the home finished, or is it a weathered-in shell? And in a small community, how many people would buy the property if it ever came back to the lender?
A note with awkward answers to those questions can still sell. It draws a smaller group of buyers, so one buyer passing tells you little about what the next would pay, and it is worth asking us to price your Alaska note before you take a single refusal as the answer. A payer with years of on-time payments behind them and real money down offsets a great deal.
Alaska notes are commonly secured by a deed of trust. It has three parties: the borrower, you as the beneficiary, and a trustee, which can be a title company, holding a limited form of title until the debt is paid. Deed of trust notes explains what is assigned when you sell one.
A deed of trust generally contains a power of sale, which allows the trustee to sell the property after a default without a full court case. That non-judicial route is commonly used in Alaska, and a court foreclosure is also possible. We keep to that general outline on purpose. An Alaska attorney or a title company there can tell you how the current rules apply to your own document.
Put the note, the recorded deed of trust and your payment record together with anything that describes the property: a survey, photos taken in more than one season, an old appraisal, a few lines on how you get there and what utilities are in place. Include the awkward parts. A buyer who learns late that the access is by river is likely to change the price, while one who knew from the start has already allowed for it.
Commonly by a deed of trust, which names a trustee alongside you and the borrower. The deed of trust is recorded in the recording district where the property sits. A buyer will ask for a copy of the recorded document.
Sometimes. Fewer buyers will look at it, and those who do want to know how the parcel is reached, whether access is legal and recorded, and how much the payer put down. A larger down payment and a long record of payments help most.
A buyer can price from a local valuation, photos and public records without travelling. For remote property that valuation can be hard to obtain, so anything you already have, such as a survey or a past appraisal, is worth sending.
Yes. The paperwork is signed where you are and the assignment is recorded in Alaska. Living outside Alaska does not change what a buyer looks at.