What discount should I expect to sell a note for?

5 Replies

I am looking at selling an acre of vacant land with financing but I need the cash so I am looking into selling notes.  I am wondering how much do note buyers pay for notes?  I know this depends on many factors but I am just looking for a ballpark figure of what kind of discount to expect.  Lets just say the sale price was $16500 I've collected a 30% down payment of $5k and monthly payments are around $244 for 60 months at 9.99% interest and it has been seasoned for 4 months and performing.  Market value of the property is $25-$30k.  

Again I know it depends on many factors but I'm just looking for a ballpark figure.  50% discount? 20%? 70%? Would it be reasonable to expect at least $7k?  

On most notes I look for a 65% or less LTV and an interest rate of at least 10% and more regularly 12%. Others may have better advice for you but I hate vacant land and avoid it unless it is the deal of the century. Land is not income producing and usually takes significantly longer to sell - I say that from bitter experience after taking it in the ear on land in Pasco County Fl. and another lot in Texas. Hopefully you can get a more positive response from someone else.

A lot of note buyers don't buy notes on vacant land. If they do they are looking for a big discount. also your note is very small and the attorney fees if the owner stops paying maybe pretty high. 

I think it's a hard sell.

@Joe P. is the property in PA? Is it a land contract or do you only hold the note ?

If it's in PA then it takes forever to foreclose and it costs a bundle to foreclose.

On a $11,000 note that's worth $25k I am not sure many investors would touch that as others noted - land is difficult to get rid of if borrower stops paying and you will have it for years between foreclosure and trying to sell. I do not think you would get $7k for it, I would estimate between $3-5k

Thanks for the replies everyone!  Definitely going to find a cash buyer now!