How to Sell a Land Note: Complete Guide to the Process, Timeline & What to Expect

By Eric Scharaga | Updated November 2025 | 12 min read

You sold a piece of land with owner financing, and now you're receiving monthly payments. But what if you need cash now instead of waiting 8-10 years for those payments? That's where selling your land note comes in.

In this comprehensive guide, I'll walk you through everything you need to know about selling a land note - from how the process works to what you can expect to receive, how long it takes, and how to find a reputable buyer.

Whether you're considering selling your note or just exploring your options, this guide will give you the information you need to make an informed decision.

What Does It Mean to Sell a Land Note?

When you sell land with owner financing (also called seller financing), you become the bank. The buyer makes monthly payments to you over time - typically 8-10 years. This creates a "land note" or "land contract" - a legally binding promise to pay.

Selling a land note means transferring that future stream of payments to someone else in exchange for a lump sum of cash today.

Here's a simple example:

Scenario Without Selling the Note:

• You sold land for $100,000

• Buyer put $20,000 down

• Created an $80,000 note at 10% interest for 8 years

• You collect $971/month for 96 months

• Total you'll receive: $20,000 down + $93,216 in payments = $113,216

• Timeline: Collect over 8 years

Scenario Selling the Note:

• Same $100,000 land sale with $20,000 down

• $80,000 note created

• You sell the note for 80% of balance = $64,000

• You collect: $20,000 down + $64,000 from note sale = $84,000

• Timeline: All cash at closing

By selling the note, you receive $84,000 immediately instead of waiting 8 years to collect $113,216. You give up some profit in exchange for immediate liquidity and eliminated risk.

Why Do People Sell Land Notes?

Land note holders sell their notes for many reasons. Here are the most common scenarios I see:

Need Immediate Cash

Life happens. Maybe you need capital for:

• Medical expenses

• Another investment opportunity

• Down payment on a property

• Business investment

• Debt payoff

• Emergency expenses

Selling your note converts future payments into immediate cash when you need it most.

Risk Elimination

Holding a land note comes with risks:

• Buyer could default on payments

• Property taxes might not get paid

• Insurance lapses

• Property maintenance issues

• Foreclosure costs if buyer stops paying

By selling the note, you transfer all these risks to the buyer. You walk away with cash and peace of mind.

Portfolio Simplification

Managing land notes requires:

• Tracking monthly payments

• Sending payment reminders

• Managing escrow for taxes/insurance

• Dealing with late payments

• Potential foreclosure if needed

Some note holders simply don't want the ongoing management hassle.

Better Use of Capital

You might have found a better investment opportunity:

• Another land deal with higher returns

• Real estate investment with immediate profit

• Business opportunity

• Stock market investment

Selling your note frees up capital to deploy elsewhere.

Estate Planning

Inheritors often prefer cash over receiving a land note. Selling the note before passing:

• Simplifies estate distribution

• Provides liquid assets for heirs

• Avoids disputes over note management

• Eliminates ongoing servicing burden

Divorce or Partnership Dissolution

When relationships end, dividing a land note is complicated. Selling provides:

• Clean break

• Fair cash distribution

• No ongoing shared obligation

• Immediate resolution

Should You Sell Your Land Note or Keep It?

Before selling, carefully consider whether selling makes sense for your situation.

Reasons to KEEP Your Land Note

You should consider keeping your note if:

Strong Interest Income

• Your note pays 9-12% interest (higher than most investments)

• You're receiving consistent passive income

• Don't need immediate cash

• Interest income supports your lifestyle

Tax Advantages

• Spreading income over years keeps you in lower tax bracket

• Capital gains spread over time

• Installment sale benefits

• Lower annual tax burden

High-Quality Buyer

• Buyer has excellent payment history

• Well-qualified borrower

• Low default risk

• Property appreciating

No Immediate Cash Need

• Emergency fund is adequate

• No pressing investment opportunities

• Comfortable with cash flow

• Long-term income strategy

Good Collateral

• Property value significantly exceeds note balance

• Low loan-to-value ratio

• Property in desirable area

• Easy to resell if needed

Reasons to SELL Your Land Note

You should consider selling if:

Immediate Cash Need

• Better investment opportunity available

• Need capital for personal situation

• Want to eliminate monthly tracking

• Prefer lump sum over payments

Risk Concerns

• Buyer payment history is spotty

• Property value declining

• Buyer financial situation uncertain

• Don't want foreclosure risk

Administrative Burden

• Tired of payment tracking

• Don't want servicing hassle

• Simplify financial situation

• Eliminate ongoing obligations

Portfolio Rebalancing

• Too much capital in land notes

• Want diversification

• Moving away from real estate

• Concentrating investments elsewhere

Market Timing

• Note buying market is strong

• Getting competitive offers

• Interest rates make notes valuable

• Good time to liquidate

How Much Will You Get for Your Land Note?

The most common question I hear: "How much will I receive if I sell my note?"

Typical Pricing Range

Land note buyers typically pay 75-85% of the remaining balance, with 80% being most common.

Factors that determine your price:

Note Characteristics (Most Important):

• Interest rate (higher rates = higher price)

• Remaining term (shorter term = higher price)

• Seasoning (payment history - longer = higher price)

• Payment frequency (monthly preferred)

Property Characteristics:

• Location and marketability

• Current property value vs. note balance

• Property condition

• Access and utilities

Buyer Characteristics:

• Credit score and history

• Payment track record

• Down payment amount originally

• Income verification

Example Pricing Scenarios

Scenario 1: Excellent Note

• Remaining balance: $100,000

• Interest rate: 10%

• Seasoning: 2 years of perfect payments

• Buyer credit score: 720

• LTV: 60% (property worth $150,000)

• Purchase price: 82-85% = $82,000-85,000

Scenario 2: Average Note

• Remaining balance: $100,000

• Interest rate: 9%

• Seasoning: 6 months

• Buyer credit score: 660

• LTV: 75%

• Purchase price: 78-80% = $78,000-80,000

Scenario 3: Below Average Note

• Remaining balance: $100,000

• Interest rate: 8%

• Seasoning: New note (at closing)

• Buyer credit score: 620

• LTV: 80%

• Purchase price: 75-78% = $75,000-78,000

Why the Discount?

You might wonder: "Why don't I get 100% of what I'm owed?"

The discount exists because:

Time Value of Money

• $100,000 today is worth more than $100,000 spread over 8 years

• Opportunity cost of waiting

• Inflation erodes future value

Risk Premium

• Default risk

• Foreclosure costs

• Property value changes

• Buyer circumstances change

Administrative Cost

• Servicing the note

• Collection efforts

• Legal costs if needed

• Time and management

Profit Margin

• Note buyer needs return on investment

• Compensates for capital deployment

• Market rate for note investments

The discount isn't arbitrary - it reflects real economic factors that affect the note's value.

The Process of Selling a Land Note

Here's exactly what happens when you sell a land note, step by step:

Step 1: Contact Note Buyer (Day 1)

You reach out to a land note buyer with basic information:

• Property address and description

• Original sale price

• Down payment received

• Note balance remaining

• Interest rate and term

• Buyer information (name, payment history)

Timeline: Same day

Step 2: Initial Quote (Days 1-2)

The note buyer provides an indicative quote based on:

• Note terms

• Property location

• Preliminary assessment

This quote is non-binding but gives you a ballpark figure.

Timeline: 24-48 hours

Step 3: Due Diligence (Days 3-5)

If you accept the indicative quote, the buyer conducts due diligence:

Documents Reviewed:

• Original promissory note

• Deed of trust or mortgage

• Purchase agreement

• Closing settlement statement

• Payment history

• Property tax records

• Title commitment

Property Assessment:

• Property value verification

• Comparable sales

• Property condition

• Marketability assessment

Buyer Verification:

• Credit report pull

• Payment history verification

• Contact buyer to confirm loan

• Income verification (if available)

Timeline: 3-7 days depending on complexity

Step 4: Final Offer (Day 6)

After due diligence, the buyer provides a firm purchase offer:

• Exact purchase price

• Closing timeline

• Any conditions

• Required documents

This is a binding offer if you accept.

Timeline: 1 day after due diligence complete

Step 5: Acceptance & Paperwork (Day 7)

If you accept, you'll sign:

• Purchase agreement for the note

• Assignment documents

• Disclosures

• Closing instructions

Timeline: Same day as offer acceptance

Step 6: Title Work (Days 8-10)

A title company:

• Updates title work

• Prepares assignment documents

• Verifies no new liens

• Prepares closing documents

Timeline: 2-3 days

Step 7: Closing (Day 11-14)

Final closing occurs:

• Sign assignment of note

• Buyer notified of new note holder

• Funds wired to your account

• You receive cash

• Transaction complete

Timeline: 1-2 days

Total Timeline: 7-14 days from initial contact to cash in hand

What Documents Do You Need to Sell?

To sell your land note, gather these documents:

Required Documents:

Original Promissory Note

• The actual note document signed at closing

• Shows payment terms, interest rate, maturity date

Deed of Trust or Mortgage

• Security instrument recorded with county

• Creates lien on the property

Purchase Agreement

• Original land sale contract

• Shows sale price and terms

Settlement Statement (HUD-1 or Closing Disclosure)

• Shows how money was distributed at closing

• Confirms down payment and note amount

Payment History

• Record of all payments received

• Dates and amounts

• Any late payments or issues

Helpful But Not Required:

Title Insurance Policy

• Shows clear title at time of sale

• Protects against title issues

Property Insurance

• Proof buyer maintains insurance

• Protects collateral

Property Tax Records

• Shows taxes current

• No delinquency issues

Buyer Contact Information

• Current address

• Phone number

• Email

Appraisal or BPO

• Recent property valuation

• Helps determine note value

Don't have all documents? Don't worry - most can be obtained from:

• Title company that handled original closing

• County recorder's office

• Your closing attorney

• The buyer directly

How to Find a Reputable Land Note Buyer

Not all note buyers are created equal. Here's how to find a trustworthy buyer:

Types of Note Buyers

Institutional Buyers

• Large companies buying hundreds of notes

• Standardized processes

• Often lowest prices

• Impersonal transactions

Private Investors

• Individuals buying notes for investment

• More flexibility

• Relationship-based

• Can be hit or miss on professionalism

Specialized Land Note Buyers (Like Damen Capital)

• Focus specifically on land notes

• Deep expertise in vacant land

• Fair pricing with transparency

• Fast, professional process

Questions to Ask Potential Buyers

Before selling your note, ask these questions:

1. "How many land notes have you purchased?" Experience matters. You want someone who understands land notes specifically, not just generic real estate notes.

2. "Can you provide references from other note sellers?" Legitimate buyers will have satisfied clients who'll vouch for them.

3. "What is your typical purchase price range?" Should be 75-85% of balance. If significantly lower, be cautious.

4. "How long does your process take?" Should be 7-14 days typically. Longer suggests inefficiency.

5. "What fees will I pay?" Reputable buyers cover most costs. You shouldn't pay large upfront fees.

6. "Do you broker notes to other buyers, or do you buy directly?" Direct buyers (like us) are simpler and faster than brokers who resell your note.

7. "Can you provide a written offer before I commit?" Get everything in writing before moving forward.

8. "What happens if you find issues during due diligence?" Understand their process for renegotiating or canceling.

Red Flags to Avoid

Be cautious of buyers who:

Request Upfront Fees

• "Pay $1,000 for appraisal first"

• "Processing fee required before quote"

• Legitimate buyers cover these costs

Pressure You to Decide Quickly

• "This price only good today"

• "We have other sellers interested"

• Legitimate buyers give you time

Won't Provide Written Terms

• Verbal offers only

• "We'll put it in writing later"

• Everything should be documented

Offer Suspiciously High Prices

• Significantly above 85%

• "We pay 95% of balance!"

• Too good to be true usually is

Have No Track Record

• Can't provide references

• No verifiable past transactions

• Brand new company

Won't Answer Questions

• Evasive about process

• Unclear about timeline

• Vague about pricing factors

Change Terms Last Minute

• Quote was 80%, now 70%

• New fees appear at closing

• Unexplained price reductions

What Makes Damen Capital Different

We built Damen Capital specifically to serve land note holders with transparency and professionalism. Here's what sets us apart:

Specialization in Land Notes

We focus exclusively on vacant land:

• We understand land values

• We know land markets nationwide

• We've purchased 150+ land notes

• We don't treat land like houses

This specialization means:

• Better pricing for you

• Faster due diligence

• Fewer surprises

• Smoother transactions

Transparent Pricing

We provide:

• Clear explanation of our pricing

• No hidden fees

• Upfront quotes

• Written offers

You'll know exactly what you're getting before committing.

Fast Process

Our typical timeline:

• Day 1: Contact us

• Day 2: Indicative quote

• Days 3-5: Due diligence

• Day 6: Final offer

• Days 7-14: Close and receive funds

We close most notes in 7-14 days.

Fair Market Pricing

We typically pay 80% of remaining balance for:

• Notes with good terms (9-12% interest)

• Properties in marketable locations

• Buyers with decent payment history

Some buyers pay as low as 60-70%. We pride ourselves on competitive, fair pricing.

No Junk Fees

You won't pay:

• Application fees

• Processing fees

• Underwriting fees

• Administrative fees

We cover the costs of buying your note. You receive the purchase price, period.

We Buy at Closing or Years Later

Unlike some buyers, we purchase notes:

• At closing (when you first sell the land)

• After months or years of seasoning

• With perfect payment history

• Even with occasional late payments

Whether you're selling land now or already holding a note, we can help.

Common Scenarios: When Note Selling Makes Sense

Let me share some real scenarios where selling land notes makes perfect sense:

Scenario 1: The Real Estate Investor

Situation:

• Sarah sells 20 acres for $80,000 with owner financing

• Buyer puts $16,000 down (20%)

• Creates $64,000 note at 10% interest for 8 years

• Sarah is a full-time land flipper

Why selling makes sense:

• She found another land deal with 50% profit potential

• Keeping note means $64,000 tied up for 8 years

• Selling note for $51,200 (80%) gives immediate capital

• Can deploy $51,200 into new deal worth $100,000+

• Velocity of capital more important than maximizing this one note

Result: Sarah sells the note at closing, receives $67,200 total ($16,000 down + $51,200 note sale), and immediately deploys capital into next deal.

Scenario 2: The Accidental Landlord

Situation:

• John inherited land from parents

• Sold it for $120,000 with seller financing (only way it would sell)

• Buyer put $30,000 down, owes $90,000 at 9% for 10 years

• John has full-time job, doesn't want to manage note

Why selling makes sense:

• John has no interest in being a note holder

• Tracking payments is annoying

• Worried about default risk

• Prefers lump sum to invest in index funds

• Simplifies his financial life

Result: John sells the note for $72,000 after 1 year of payments. Total received: $30,000 down + $12,000 in payments + $72,000 note sale = $114,000. Invests proceeds in retirement accounts.

Scenario 3: The Opportunistic Subdivider

Situation:

• Maria bought 40 acres for $200,000

• Subdivided into 8 lots

• Selling each lot for $50,000 = $400,000 total potential

• Offering seller financing to sell quickly

• Sold 3 lots so far with owner financing

Why selling makes sense:

• Has $150,000 in notes from 3 lot sales

• Wants capital to subdivide another property

• Selling the notes at closing for 80% = $120,000

• Uses $120,000 to buy next subdivision project

• Repeat process on larger scale

Result: Maria sells all notes at closing as lots sell. Continuously converts seller-financed sales into immediate capital to fund new projects. Scales from 1 project to 3-4 simultaneous projects.

Scenario 4: The Risk-Averse Retiree

Situation:

• Bob sold his hunting land for $200,000

• Buyer put $40,000 down, owes $160,000 at 8% for 8 years

• Bob is 67 years old

• Worried about buyer default

Why selling makes sense:

• Bob doesn't want to deal with potential foreclosure in his 70s

• Buyer has been late twice on payments

• Property taxes were paid late once

• Bob would rather have certainty than hope for full payoff

Result: Bob sells note for $128,000 (80% of $160,000 balance). Total received: $40,000 down + $24,000 in payments collected + $128,000 note sale = $192,000. Peace of mind is worth the discount.

Frequently Asked Questions About Selling Land Notes

Q: Can I sell my land note immediately after selling the property?

A: Yes! We buy notes at closing, meaning you can sell the land with owner financing and sell us the note the same day. You receive the down payment plus 80% of the note balance immediately.

Q: What if my buyer has made late payments?

A: We still buy notes with occasional late payments, though pricing may be slightly lower. Consistent late payments (more than 3 in past 12 months) will reduce the purchase price.

Q: Can I sell just part of my note?

A: Some buyers purchase partial notes, but we typically purchase the entire note. This provides a clean transaction with no ongoing involvement.

Q: What if I don't have all the documents?

A: Don't worry - we can help you obtain missing documents from the title company, county recorder, or buyer. Missing paperwork rarely prevents a sale.

Q: How is the buyer notified that I sold the note?

A: We send a formal notification letter informing them of the assignment and providing new payment instructions. This is handled professionally as part of the closing process.

Q: Will selling my note trigger tax consequences?

A: Yes, selling a note typically creates a taxable event. The gain (sale price minus your basis) is taxable in the year of sale. Consult a tax professional for your specific situation.

Q: What if my buyer stops paying after I sell the note?

A: Once you sell the note, all risk transfers to the buyer (us). You have no liability or involvement if the borrower defaults. You've already received your money.

Q: Can I negotiate the purchase price?

A: Our initial quote is based on market rates and note quality. If due diligence reveals the note is stronger than expected (better payment history, higher property value), we may increase the offer.

Q: What if my buyer wants to pay off the note early?

A: Once we buy the note, we handle any payoff. You're not involved. However, if the buyer pays off before we buy the note, you receive the full balance.

Q: Do you buy notes in all states?

A: Yes, we purchase land notes nationwide. Different states have different foreclosure processes, but we buy notes in all 50 states.

Q: How do I know you're legitimate?

A: We've purchased 150+ land notes, are established in the industry, and can provide references. We also use licensed title companies and attorneys for all closings.

Q: What size notes do you buy?

A: We typically purchase notes with balances of $25,000 or more. Smaller notes can be purchased but may require different pricing due to higher costs relative to balance.

Tax Implications of Selling a Land Note

Important: I'm not a tax professional. Consult with a CPA or tax attorney for your specific situation.

General Tax Considerations:

Installment Sale Rules

• If you've been reporting income under installment sale rules

• Selling the note accelerates remaining gain

• Entire remaining gain recognized in year of sale

Capital Gains vs. Ordinary Income

• Original land sale likely qualified for capital gains

• Note sale also typically capital gains treatment

• Long-term rates apply if land held over 1 year before initial sale

Calculating Gain on Note Sale

• Sale price of note: $80,000

• Minus: Remaining principal basis: $70,000

• Minus: Selling costs: $500

• Taxable gain: $9,500

Timing Considerations

• Consider year of sale for tax planning

• May want to split into two tax years

• Offset with losses if available

• Consider estimated tax payments

Tax Benefits of Note Holding vs. Selling

Holding the Note:

• Spread gain over multiple years

• May keep you in lower tax bracket

• Interest income taxed as received

• Capital gains spread over time

Selling the Note:

• Entire gain in one year

• Could push you into higher bracket

• But gain is still long-term capital gains

• Immediate liquidity may be worth tax cost

The bottom line: Consult a tax professional before selling to understand your specific situation.

Alternatives to Selling Your Entire Note

If you need cash but aren't ready to sell the entire note, consider these alternatives:

Partial Note Sale

Sell a portion of future payments:

• Keep some monthly income

• Get partial lump sum

• Maintain some note ownership

Example:

• $100,000 note, $800/month payments

• Sell next 3 years of payments for $25,000

• After 3 years, payments revert to you

• You receive $25,000 now + payments resume later

Pros: Keep some upside, get some cash Cons: Complex, lower pricing, ongoing involvement

Note Servicing Arrangement

Hire someone to manage note:

• They collect payments

• Send you monthly proceeds

• Handle borrower communication

• Typically 1-2% of payment

Pros: Keeps note, eliminates hassle

Cons: Doesn't provide immediate cash

Borrow Against the Note

Use note as collateral for loan:

• Get loan for 60-70% of note value

• Keep receiving payments

• Use payments to service loan

Pros: Keep note upside, get liquidity

Cons: Interest costs, more complexity

Refinance the Buyer

Buyer refinances with bank:

• You receive full payoff

• Buyer gets better terms maybe

• Clean exit for you

Pros: Receive 100% of balance

Cons: Requires buyer cooperation and qualification

Each alternative has trade-offs. For most note holders, selling the entire note provides the simplest, cleanest solution.

The Bottom Line on Selling Land Notes

Selling a land note converts future payments into immediate cash. While you give up some profit (typically receiving 75-85% of the remaining balance), you gain:

• Immediate liquidity for new opportunities

• Risk elimination (no more default worry)

• Simplified finances (no more payment tracking)

• Peace of mind (transaction complete)

The process typically takes 7-14 days and requires minimal involvement from you. A reputable note buyer handles the complexity while you receive your cash.

Whether selling makes sense depends on your individual situation:

Sell if you:

• Need immediate capital

• Want to eliminate risk

• Have better investment opportunities

• Simplify your financial life

• Are concerned about buyer reliability

Keep your note if:

• Don't need cash now

• Enjoy passive income

• Have excellent buyer

• Interest rate is attractive

• Prefer tax deferral

Ready to Explore Selling Your Land Note?

If you're considering selling your land note, we'd be happy to provide a no-obligation quote.

At Damen Capital, we specialize in purchasing land notes with:

• Fair pricing (typically 80-85% of balance)

• Fast closings (7-14 days)

• No junk fees

• Transparent process

• 150+ notes purchased

• Nationwide service

Whether your note is brand new or has years of seasoning, whether your buyer has perfect payment history or occasional late payments, we'd like to make you an offer.

Call or Text: 302-526-0200 Email: eric@damencapital.com

Get Your Free Note Quote - No Obligation

Provide us with basic information about your note:

• Property location

• Note balance remaining

• Interest rate and term

• Buyer payment history

We'll provide an indicative quote within 24 hours, and you can decide if selling makes sense for your situation.