If you are looking to sell your mortgage note or notes, also known as promissory notes or real estate notes, there are a few items you need before we can make you a reasonable offer. They are:

  1. Your Original Promissory Note
  2. The Trust Deed or Mortgage (Security Instrument)
  3. Payment history

The Promissory note is the promise to pay and should include the following:

  1. Names of all borrowers
  2. The Full Property Address
  3. The Interest Rate (Fixed Rate or Adjustable)
  4. Late Charge Amount
  5. Amount of the loan
  6. The Term of the loan (months or years)
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To have a sell able note:

The Note must enforceable under the law. Your note must have provisions that allow the note holder to force the borrower to comply with legal process in a court of law or via judgment.
The Note must also be collectable. Is the borrower able to make payments on the note?
Is the Note Marketable? If the note is offered for sale does anyone want to buy it? Is it a better investment than other similar investment opportunities?

Sell Mortgage Note

A Typical Promissory Note

What factors do we look at when deciding the value of you note?

  • The Quality of the borrower. How good is the payment history, how good is the credit history of the borrower? How financial strong is the borrower? What is his employment history like?
  • The Quality of the collateral security. What is the true appraised value of the real estate, the land, the buildings, the furniture and fixing and equipment?
  • The Term of the note, shorter is better as investors like to get the money back sooner rather than later. Is the Term 6 months,60 Months (5 Years), 120 Months (10 Years), 180 Months (15 Years) or 360 Months (30 Years)
  • The Terms of the note. Is it a full amortized note, does the note have a balloon payment provision, are he payment made monthly, yearly or a single payment note.
  • What are the default provision in the note, what happens if the borrower does not pay or becomes unable to pay?
  • How liquid is the note, if the note buyer or investor need cash fast how easily can the note be sold.
  • How does the interest rate of the note compare to investment vehicles of similar risk.

13 Questions You Might be Asked by a Note Holders

Some Additional Factors that are very important in the determining the value of a note

  • The Location of the Real Estate/Property. Location – Location – Location, investors like there security to be in nice neighborhoods. If the collateral security of the note is in a bad part of town the value of the note with be dramatically impacted and may in fact make the note unsellable.
  • A Lender Title Insurance Policy is very important, the note buy want to ensure that they are protected should any title issues arise whilst they hold the note.
  • A well written and clearly defined promissory note that is written in plain English has more value that a note that has tones of legal jargon. Most note Investors are not attorneys and like to be able to understand the terms of the note without having a degree in law.
  • The interest rate of the note should ideally be above current market rates or other similar financial instruments. If the interest rate is low, the note investor will discount the note more heavily to achieve his or her desired yield.
A Trust Deed Example

A Trust Deed Example

I hope this gives you a few ideas of the things we look at when deciding to buy your note.
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Additional Information


When it comes to obtaining a mortgage loan, an individual has many more options than he may have thought of. There is the conventional bank loan where most people go to find the money for their purchases and then there is the less known promissory note buyer. This type of investment strays from the traditional in that both buyer and seller can basically create their own investment deal outside of the stringent requirements that are evident in the banking industry today. Mortgages come in all different shapes and sizes and you will probably need a convenient note buyers guide to help you to fully understand each type and how they work; this will help you to decide on the right investment tool for you. Searching online can give you lots of information and could be very beneficial for those new to note buying. Still, if you are thinking about buying a private note, then here are a few basic things to get you started:

Seller Financing

This type of financing is popular with real estate note buyers and is very common among investors. When a particular seller agrees to lend a purchaser the necessary funds to purchase a home, this amount could include the total purchase price or the amount owed after a down payment has been made. In this type of loan, the principle and interest payments are structured to be amortized over a period of time that could range anywhere from 5 to 30 years. Usually with a 5-year loan, the borrower is expected to make a substantial balloon payment to cover the remaining balance. The thought here is that the borrower will be able to secure conventional financing from an institution or another lender at the end of the term. If for some reason the borrower is not able to meet that final payment or defaults on his payments before the final payment is due, the investor can foreclose on the sale and acquire the property for himself.

These types of loans are very popular for those who are unable to secure traditional loans from an institution; self-employed, retirees, or those with a negative credit rating are more likely to take advantage of this type of loan.

Private Mortgage Loans

Another avenue that many investors use are the private mortgages; these are created with private lenders that lend money at above-market interest rates. In these types of loans, the property is generally held as a collateral in case the purchaser defaults at any time. Generally, those that avail themselves of these private note buyers, such as Texas note buyers are those that may be considered at high risk for the traditional financial institution. If you choose to take advantage of this type of investment, it is important to carefully select your investment option; you’ll want to be sure that the borrower is capable of repaying the loan and that the property’s condition is in line with the current property value. If for any reason, the note buyer has to foreclose, you will want to make sure that you have a means of recouping your investment.

Another reason why this type of loan is so popular has to do with their higher than average interest rates. This makes them very attractive investments to hold onto; however, that does not mean that they can’t be sold off to a third party if there is ever a need for immediate cash.

Time Value of Money

It is important to take into consideration the idea of “time value of money”, since this controls how much you would be able to invest. When you, the seller, are ready to sell your note to a third party the price you sell it for is determined not by the outstanding balance on the loan but on the current value of the property itself. Factors have to be figured in the equation such as property condition, borrower’s financial status, and the outstanding balance among other things. The formula for determining the price of a note can be rather complicated, but there are many resources online to help you figure it out.

Real estate note buyers are a unique group of people that know how to take risks and make money from it. They are savvy investors who can tailor make a financial package for anyone that may need it. In light of the way that the economy is changing, it is only realistic that the way people buy property changes with it. Taking the time to learn all about investing in promissory notes can make a major difference in your real estate portfolio and certainly represents a major increase in your profit potential.

Sell Your Note to a Note Buyer