Note Valuation
How Much Is My Real Estate Note Worth?
The value of a note depends on far more than the remaining balance. Here's exactly what a professional buyer looks at – and why a discount almost always applies.
Valuation Factors
What Actually Determines A Note's Value
Remaining Principal Balance
The unpaid balance is the starting point – but it's only the starting point.
Interest Rate
Higher-rate notes are typically worth more relative to balance than low-rate notes.
Payment History
A clean, documented record of on-time payments significantly increases value.
Property Value
We verify the current market value of the collateral securing the note.
Loan-to-Value Ratio
The lower the LTV, the safer the note – and the stronger the offer.
Remaining Term
The number of remaining payments directly impacts the value.
Property Type
Owner-occupied homes typically appraise better than land or specialty property.
Borrower Creditworthiness
A payor with strong credit reduces risk and improves pricing.
Seasoning History
How long the note has been performing matters – more seasoning, more confidence.
Why Discounts Exist
Why Notes Almost Always Sell At A Discount
When you sell a note, you're trading future payments – sometimes 20 or 30 years of them – for cash today. Money received today is worth more than money received years from now because of three forces:
Time value of money
A dollar today can be invested and earn returns over decades.
Risk
Borrowers can default, properties can decline in value, and payments can stop.
Opportunity cost
Capital tied up in a single note can't be deployed elsewhere.
The "discount" isn't a penalty – it's the math that allows a note to convert into immediate cash.
Quick Reference
Higher Value Notes Typically Have…
- Interest rate above 7%
- 12+ months of seasoning
- Owner-occupied collateral
- Loan-to-value below 70%
- Documented payment history
- Strong borrower credit
- Reasonable remaining term
Examples
Example Note Valuations
These illustrate different outcomes depending on the underlying terms and property type.
Single Family Home
- Original balance
- $120,000
- Current balance
- $100,000
- Interest rate
- 7.5%
- Remaining term
- 22 years
- Property type
- Single-family residence
- Estimated range
- $51,000 – $72,000
Commercial Building
- Original balance
- $275,000
- Current balance
- $250,000
- Interest rate
- 8.25%
- Remaining term
- 27 years
- Property type
- Multi-Tenant Warehouse
- Estimated range
- $132,000 – $160,000
Mobile Home in a Park
- Original balance
- $40,000
- Current balance
- $32,000
- Interest rate
- 9%
- Remaining term
- 10 years
- Property type
- Manufactured Home
- Estimated range
- $22,500 – $24,000
Examples shown are illustrative only and do not constitute actual offers. Every note is evaluated individually.
Once you know roughly what your note is worth, the next decision is structure. You can sell the entire note for a single lump sum, or sell only part of the payment stream and keep the rest. Commercial collateral is underwritten differently – see how commercial notes are priced. Every evaluation on this site is prepared by Andrew Hasser, a real estate investor, private lender, and note buyer.
Free Service
Want A Professional Evaluation?
Share your note details below. Andrew will personally calculate a written estimate based on the same factors institutional note buyers use – at no cost and with no obligation.
Step 1 of 4