Sellers who shop their note usually end up with two or three numbers on the table. They rarely line up. One is a percent, one is a dollar figure, one is a range "subject to review." Picking the biggest one is how people get burned.
I buy land notes, so one of those offers might be mine. Here is how I would compare them if I were on your side of the table.
What Should I Compare First When I Get Two Note Offers?
Cash to you at closing, in dollars, after every fee, for the same payments.
Everything else is a way of getting to that number. Ask each buyer for the dollar amount that will be wired to you, and what, if anything, comes out of it. If one offer buys all the payments and the other buys only some, they are not the same deal, so the next section matters.
Why Can Two Offers at the Same Percent Pay Different Amounts?
Because the percent can be of the balance, of the remaining payments, or of the sale price, and those are very different numbers.
Take an $80,000 note at 10% over 8 years. The payment is $1,213.93 a month, and 96 payments add up to $116,538, because that total includes all the future interest.
| How the offer is quoted | Percent | Cash to you |
|---|---|---|
| Percent of unpaid balance ($80,000) | 85% | $68,000 |
| Percent of remaining payments ($116,538) | 60% | $69,923 |
"60%" sounds like a lowball next to "85%." In dollars the two offers are within $2,000 of each other. Always turn every offer into dollars. We quote as a percent of the unpaid balance, 80 to 90% for notes that meet our criteria, because that is the number sellers can check against their own statement.
A partial purchase is different again. It buys only some of the payments, so the cash is smaller, but the rest of the payments come back to you later. Compare a partial to a full sale by asking what you get now and what you get back.
Selling a land note?
We buy land notes with our own money for 80 to 90% of balance. Written offer in 24 hours, close in about 7 days.
Get a Free QuoteWhat Is My Note Worth?Is the Offer a Firm Price or a Range?
A range is a guess until the buyer has seen your documents. Ask what can move it.
Many first offers are made before the buyer has seen the payment history, the title, or the land. When the review finds something different, the price drops. That is called a retrade. Ask each buyer two questions: when do I get a firm number, and what can change it after that?
Our answer: the first number is an estimate from what you tell us. After we see the note, the recorded deed of trust or mortgage, the payment history, and title, you get a firm written offer. After that the price changes only if title shows a problem we did not know about, the payment history does not match what was sent, or the property facts are different. How a note sale closes lays out each step.
What Fees and Costs Come Out of the Offer?
Ask who pays title, recording, attorney, and any review or servicing fees, in writing.
A higher offer that takes out a due diligence fee, a closing fee, and the title bill can net you less than a lower one with no costs. Ask each buyer for a list. We charge sellers nothing: no broker fee, no closing costs, no due diligence fee. The offer you accept is the amount wired.
Does the Buyer Need a Buyback or Recourse From You?
If you have to buy the note back when your borrower stops paying, you have not fully sold the risk.
Some offers come with recourse: if the borrower defaults within a set time, you repurchase the note or cover the loss. That can be a fair trade for a higher price on a weaker note, but it is not the same as a clean sale. Read for words like recourse, repurchase, or buyback. We ask for a seller buyback only on notes with less than 20% down, and we price those case by case.
How Fast and How Sure Is Each Closing?
Ask for the number of days from a signed offer to the wire, and whose money funds it.
A buyer using its own money controls its own timeline. A broker has to wait on the end buyer, and the price can change when that buyer reviews the file. See direct note buyer vs. note broker. Our closings take about 7 days on a complete file.
Which Note Offer Should I Take?
The highest firm offer, in dollars, with no fees and no buyback, from the company that will wire the money.
Line them up like this:
| Check | Offer A | Offer B |
|---|---|---|
| Cash wired to you, in dollars | ||
| All payments or only some? | ||
| Firm, or a range until review? | ||
| Fees or costs you pay | ||
| Buyback or recourse required? | ||
| Days from signed offer to wire | ||
| Whose money funds it |
In my experience, the offer that wins on paper and the offer that wins at closing are often different. If you got your offers from mailers, start with how to tell if a note buyer letter is legit.
Want a written offer from the company that will wire the money?
Get a Free Quote →Frequently Asked Questions
How do I compare two offers on my land note?
Put both in dollars of cash to you at closing, after every fee, for the same payments. Then check whether each price is firm or a range, whether either needs a buyback from you, and how many days each buyer needs to wire the money.
Why do two note offers at a similar percent pay different amounts?
Because the percent can be of different things: the unpaid balance, the total of the remaining payments, or the original sale price. A percent of the remaining payments looks bigger because that total includes future interest. Convert every offer to dollars.
What is a buyback or recourse in a note sale?
A promise that you will buy the note back, or cover a loss, if your borrower stops paying within an agreed time. An offer that needs a buyback is worth less to you than the same price without one, because you keep some of the risk.
Should I take the highest note offer?
Take the highest firm offer, in dollars, with no fees and no buyback. A higher number that is only a range, or that charges fees at closing, can end up paying you less than a lower number that holds.