Michigan sellers hold mortgage notes and a great many land contracts, from Detroit houses to cabins Up North. We put yours in front of several buyers and show the pricing worksheet for each offer.
Why Michigan note and land contract holders take less than they should.
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 has deep roots in Michigan, and much of it is written as a land contract: the seller keeps legal title, the buyer pays over time and receives the deed once the price is paid. You find them on houses in Detroit and across Wayne, Oakland and Macomb counties, in Flint and Saginaw, in Grand Rapids, Lansing and Kalamazoo, and on cabins and hunting land Up North and in the Upper Peninsula.
Other Michigan sellers use a promissory note secured by a mortgage. Both can be sold, but a buyer treats them as different assets, so which one you hold is the first thing we ask.
Michigan generally uses a mortgage. Deeds of trust, the usual instrument in a number of other states, are uncommon here. Where the mortgage contains a power of sale, foreclosure is commonly done by advertisement, a non-judicial process of published notice and public sale without a full court case. A period in which the borrower can redeem the property commonly follows the sale.
Because the seller still holds title, the remedy is different. Depending on the contract’s wording, a seller commonly proceeds by forfeiture or by foreclosure, and both involve the courts. Our page on selling a land contract covers what a buyer receives at closing. Which remedy fits your contract, and what the current procedure is, are questions for a Michigan attorney.
A buyer sets a price by discounting your remaining payments at the return they want on their money. The pool of bidders is the first influence. Some buyers purchase mortgage notes only, so a land contract goes to a smaller group, and with less competition the return they ask for tends to be higher.
Balance size comes next. A buyer’s costs for title work and review are much the same on a small note as on a large one, so on a low balance they take a bigger share of the price, and some buyers set a minimum and will not bid below it.
Then there are property taxes. In Michigan, unpaid property taxes can end with the county taking the property, which can wipe out your security, so buyers confirm early that taxes are current. On a land contract the payer commonly carries the taxes and insurance, and proof that both are paid supports the price.
Seasoning counts too. Seasoning is the length of the payment record, and payment history changes the price enough that a payer with years of on-time payments on a modest house can be worth more to a buyer than a new contract on a better one.
With those in hand, send us the details of your Michigan note or contract and we will put it in front of buyers who take that instrument. If the balance is low, ask us at the start whether the likely offers justify selling at all.
Yes. You sell your interest as the seller under the contract, and the buyer takes over the right to the payments. The pool of buyers is smaller than for mortgage notes, so it pays to have the contract shown to more than one.
It can be, because some buyers purchase mortgage notes only and the remedy on default is different. A strong payment history and good equity in the property can close much of that gap.
Where the mortgage has a power of sale, foreclosure is commonly done by advertisement, outside a full court case, and the borrower commonly has a period afterward to redeem. The details depend on the property and the documents, so ask a Michigan attorney.
It depends on the balance, the payment record and the condition of the house. Some buyers set a minimum balance and will pass. Others specialize in smaller notes. We will tell you plainly if the offers are unlikely to justify selling.