Selling Mortgage Notes – FAQ

When you sell a promissory note, mortgage note, deed of trust, contract for deed, or another type of loan agreement – you are assigning your right to receive future payments to someone else. In exchange, you receive a lump sum of cash.

Selling a real estate note involves sharing copies of documents such as your loan paperwork, closing statement, and payment history with a note buyer who will provide a quote and perform further due diligence. The note buyer will order a title report, property appraisal and check your borrower’s credit. Selling a note usually takes 30 – 45 days. Closing usually takes place at a title office. Other options include “close by mail” or the use of a mobile notary.

There is no pre-determined discount when selling a mortgage note. Prices on the secondary market fluctuate based on current interest rates and other economic factors. Note buyers also take into account factors such as the property type and condition, equity coverage, borrower credit, payment history, loan terms, and the number of remaining payments.

The only thing that will change for the borrower if you sell your note is who they make their payments to. Since we are buying an existing agreement, none of the terms of that agreement will change. This includes the payment amount, interest rate, and due dates.

If you work with a loan buyer who pays due diligence and closing costs, selling your note should not cost you anything. Be sure to ask if the buyer expects any costs could come up that would need to be covered by you.

It usually takes 30 – 45 days to sell a residential real estate note. Notes secured by commercial property or businesses can take longer.

If you are the party collecting payments, a contract for deed can be sold. In fact, it occurs quite often. Because you still hold title to the property, the transaction will involve selling the real estate, and assigning the contract for deed to the buyer.

If you are the party collecting payments, a land contract can be sold. In fact, it occurs quite often. Because you still hold title to the property, the transaction will involve selling the real estate, and assigning the land contract to the buyer.

If you are the party collecting payments, a deed of trust or trust deed can be sold. You have the option to sell all of your remaining payments, or just a portion of them (called a partial).

As secondary market note buyers, we take current interest rates and other economic factors into account. Pricing is also based on the property type and condition, equity coverage, borrower credit, payment history, loan terms, and the number of remaining payments. We provide free no-obligation quotes so that you can always know the value of your note.

For a detailed breakdown of how each factor affects your offer, see What Is My Mortgage Note Worth? The 6 Factors That Determine Your Price.

Of course many times, people sell mortgage notes because they want or need cash. However, this isn’t the only reason. Others sell a note because they’re tired of the hassle involved, worried their borrower will default, want to simplify their financial affairs, or they have inherited the note from an estate, will, or divorce.

Yes. Selling a portion of the remaining payments is called a partial. Rather than selling the entire note, you sell a set number of future payments to a note buyer, then the payments revert to you after that period. A partial is worth considering when you need a specific amount of cash but want to preserve some of your income stream. In most cases, a partial also carries a smaller discount than a full sale.

To get a quote, a note buyer needs copies of three things: your signed promissory note, your recorded mortgage or deed of trust (or contract for deed or land contract), and your final settlement or closing statement. You will also share the current loan balance, the date of the last payment received, and the next payment due date. Having your payment history records ready helps the process move faster.

The tax treatment of a note sale depends on your specific situation and is worth confirming with a CPA before you close. Generally, proceeds may be treated as a capital gain or ordinary income depending on how long you have held the note, the original sale price of the property, and your cost basis. We are happy to explain how a sale would be structured so your tax advisor has the full picture.

Most seller-financed notes close within 30 days. Some move faster depending on how promptly documents are provided and how smoothly the appraisal and title search go. Getting a quote takes just one phone call. If you are working toward a specific date — settling an estate, meeting a tax deadline, or funding a purchase — let your note buyer know upfront so they can work toward your timeline.