Illinois notes come from Chicago two-flats, suburban houses, downstate homes and farm ground sold with seller financing. We put your note in front of competing buyers and show the worksheet for each offer.
What weakens an Illinois note before a buyer has read the file.
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 saleIllinois is two markets inside one state line. Chicago and the collar counties, Cook, DuPage, Lake, Will, Kane and McHenry, hold the bulk of the housing. A note holder here is often an owner who sold a bungalow, a two-flat or a small mixed-use building on the South or West Side, or in a suburb such as Joliet, Aurora or Waukegan, to a buyer who could not get a bank loan.
Downstate, in Rockford, Peoria, Springfield, Decatur and the Metro East communities across the river from Missouri, house prices are lower and seller financing fills a gap the banks leave on small loans. Beyond the towns lies farmland, which families sell to relatives or neighbors with the seller carrying the paper.
Illinois commonly uses mortgages. Your payer signed a note and a mortgage, and the mortgage was recorded in the county. Foreclosure, the process for recovering the property after a default, is generally judicial in Illinois: the holder files suit and a court supervises the steps through to a sale. A buyer decides what return they need on their money, and a court-supervised recovery generally means more time and legal cost if things go wrong, so that expense is built into the return a buyer asks on an Illinois note.
The state also has a long tradition of installment contracts, sometimes headed “articles of agreement for deed”, under which you keep title until the final payment. They were widely used in Chicago neighborhoods and are still found downstate. How a default is handled depends on the contract and on how much the payer has paid in, and Illinois has rules aimed at certain residential installment contracts. Foreclosure vs forfeiture explains the two routes in general terms, and an Illinois attorney can tell you which one your document falls under.
Property taxes come ahead of your lien, and a tax sale can threaten the security if nobody acts. A buyer will look up the parcel with the county before making a firm offer. If the taxes are current, show the receipt. If your payer has fallen behind, find out the amount first, and read what to do when a borrower has not paid the property taxes.
Building type narrows the field as well. A two-flat or a storefront with apartments above is income property, and a buyer set up for single-family houses may decline it while another bids.
Equity is the gap between what the property is worth and what the payer still owes. As an example only, a $60,000 balance on a house worth $100,000 leaves $40,000 of equity, 40% of the value. A wide gap gives the payer a strong reason to keep paying and gives the buyer a cushion if they stop. Add seasoning, meaning a long record of on-time payments, and an Illinois note can attract competing bids despite the court process behind it. The payer and the property decide more of the price than what changes from state to state.
Check the property tax status before you tell us about your Illinois note, because the county record is where a buyer will look first. Lay out the note, the recorded mortgage or installment contract and a payment record with it, and note whether the building has one unit or several.
Generally, yes. Illinois commonly uses mortgages, and a mortgage foreclosure there goes through the courts. Buyers know this and account for it in the yield they ask for. It does not stop a note from selling.
Often you can. These are land contracts, where you keep title until the payer completes the payments. Illinois has specific rules for some residential installment contracts, so a buyer will want to see that yours was set up properly. An Illinois attorney can review it.
Yes. Property taxes take priority over your lien, so a buyer checks whether they are current and whether any tax sale has taken place. If your payer has fallen behind with the county, find out the amount before you ask for offers.
Yes. Farmland notes are sold, and good ground with a sizeable down payment is attractive security. A buyer will ask how the land is used, whether it is leased to an operator and how its value was established.