Ohio has many small notes and land contracts on older houses, and foreclosure here generally goes through the county courts. We take your note to buyers who handle that and show every number.
Why an Ohio holder hears a low number.
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 saleOhio has a lot of older, lower-priced housing, and that shapes its notes. In Cleveland, Akron, Youngstown, Toledo and Dayton, investors have long bought houses cheaply and sold them on terms to people who could not get a bank loan, which produces notes with small balances. In Columbus and the Cincinnati suburbs, prices and balances are higher and the holder is more often a former homeowner.
In the southeast, from Athens through the Hocking Hills to the Ohio River, the paper is on cabins, hunting land and rural homes. Across the western farm counties, families hold notes on farmhouses and acreage.
A buyer sets a price from the return they need and from what a default would cost them. Ohio foreclosures generally go through the county court and end with a public sale, which is judicial foreclosure, and the cost of a court case does not shrink with the size of the loan. Suppose, purely as an example, that the legal work came to $5,000. That is 5% of a $100,000 balance and 20% of a $25,000 balance, which is why some buyers set a minimum balance or pass on small notes.
A small Ohio note can still sell when the file is strong. A long run of on-time payments is the best argument it has, and our page on how seasoning changes the price explains why. Buyers also look at the house itself for open code violations, unpaid water bills and back taxes, so it helps to find out where those stand before a buyer does.
Ohio commonly uses a mortgage, which gives the lender a lien, a legal claim on the property. Land contracts are also common. Under a land contract, you keep the deed and the buyer pays in installments. The law on ending one after a default is different in each state, and Ohio has specific rules for residential property. In general terms, once a buyer has paid for long enough or paid down enough of the price, the seller generally has to foreclose through court instead of simply cancelling the contract. The thresholds are set by state law and can change, so get them from an Ohio attorney or a title company in the county where the house is.
A land contract that was never recorded at the county recorder’s office gives a note buyer less to rely on. If yours was not recorded, say so at the start and ask the attorney or title company whether it can be recorded now.
Before anything else, confirm with the county recorder that your mortgage or land contract was recorded. Then gather the note or contract and the payment ledger, and have your Ohio note priced. If the offers that come back are poor, keeping the note and its payments may be the better choice, and you can judge that once the numbers are in front of you.
In most cases, yes. The buyer takes an assignment of the contract and a deed to the property, and your payer's terms stay the same. A recorded contract with a long payment record is the easiest kind to sell.
Sometimes. In general terms, once a buyer under a residential land contract has paid for long enough or paid down enough of the price, the seller generally has to foreclose through court instead of cancelling the contract. The thresholds are set by state law, so ask an Ohio attorney how they apply to yours.
Not necessarily. Some buyers set a minimum balance and others specialize in small notes. A small note with years of on-time payments and a house in fair condition can still draw offers. If none come, keeping the note and its payments is a reasonable outcome.
With the county recorder in the county where the property is. A buyer's title search starts there. If your land contract was never recorded, say so early and ask a title company or attorney whether it can be recorded now.