What Factors Affect the Value of Your Land Note?

We hesitated to include this section since no note is perfect, and we don't expect perfection when we buy a note, but many of our sellers are interested in this topic.

Here are some questions that affect how much we would pay for your note:

1) What is the value of the land backing it?  Suppose that we buy a note, and it goes into default and the land backing the note has less value than what we paid for it, then we will be taking a loss.

2) Performing or non-performing?  A note where the borrower is making payments is a performing note.   A note where the borrower is not making payments is a non-performing note.  In most cases, performing notes are worth more.

2) Payment history?  Suppose that there is no payment history available with the note.  Then we will need some way to establish the remaining balance on the note.  There are work-arounds for this.

3) Payment history spotty?  Suppose that there is a payment history but the borrower is frequently late on payments or misses payments.  Then we as the buyer of the note will be less confident that they will make payments in the future.

4) Third party servicing?  Some notes have been serviced by independent third parties who track the payments.  Such notes often are more valuable than similar notes that do not have a third party servicer because the servicer can provide evidence of payments in the event of a dispute.

5) Who pays for servicing?  If there is a servicer, generally notes where the borrower pays for the servicing rather than the lender will be more valuable.

6) Complex requirement around default?  Notes where the procedures and cost of foreclosure or other processes around reclaiming the property in the event of default obviously will be less valuable than notes that do not include such requirements.

7) Ambiguity in the text of the note?  If the note text itself is ambiguous on who pays what or what happens in the event of default it may lead to a dispute later.  So, we prefer notes where provisions are clear and complete.

Even if your note compares less than favorably across these questions, it still may have significant value, and we would welcome the opportunity to make you an offer on it.  So, if you are interested in an offer, please check our our “Free Offer on Your Note” page.