Selling an owner-financed note: what note buyers ask for
A note you carried is an asset you can sell. Note buyers pay cash now for the payments your borrower would have made over the coming years, usually at a discount to the balance. Some buy the whole note; some buy only a set number of payments and hand the rest back to you. Either way, the first thing any buyer asks for is the record.
What a note buyer looks at
- The pay history. How long the borrower has been paying and whether the payments came on time. A note with a long, clean history is worth more than a new one. Buyers call this seasoning.
- The borrower. Their credit and how much of their own money went into the property as a down payment.
- The property. What it is worth today against what is still owed on the note.
- The terms. The rate, the payment, the time left, and whether there is a balloon.
- The paperwork. Whether the note, the deed of trust or mortgage, and the title policy are complete, signed and recorded.
What they will ask you for
| Item | What it shows the buyer |
|---|---|
| The signed note | The terms the borrower agreed to: rate, payment, late fee, balloon. |
| The recorded deed of trust or mortgage | That the note is secured by the property. |
| The closing statement and title policy | What the property sold for, the down payment, and that the title was clear. |
| The full pay history from the first payment | Every payment with its date and how it was applied. This is the item most sellers have trouble producing. See what a certified payment history is. |
| The current balance and next due date | Where the note stands today, and whether anything is late. |
| Insurance and property taxes | That the property is insured and the taxes are paid, and any escrow you hold for them. |
| The borrower's contact details | So the buyer can confirm the loan with the borrower. Share these only once you are serious about a buyer. |
Get the record straight before you call
A buyer prices the note from the record you hand over. Gaps in the pay history, a balance that does not match the payments, or fees nobody can explain all push the offer down or end the conversation. If you have been keeping a spreadsheet, check that its balance follows from the payments that actually arrived. The payment ledger template shows the columns a buyer expects to see.
Selling a note can also change how the rest of your gain is taxed. Talk to your tax professional before you sign.
Note-sale packages in OwnerNote
OwnerNote puts the whole record into one PDF for a note buyer, as of the day you choose: the terms, the full pay history from the first payment, the balance and whether the note is current, the last year of late fees and escrow, and a list of the documents you keep with the note. The borrower's contact details are included only if you ask for them. Nothing about the package is stored, so you can make a fresh one for each buyer who asks.
If you decide not to sell, the same record keeps doing its everyday job: payments applied the same way every month, a payoff letter when the borrower refinances, and year-end interest totals.