Selling a note to another buyer

[Horacio Gutierrez]

Hello,

Say I do some seller finance where I carry a note for $100000 for 30 years at 5%. I decide to sell the note in 10 years will as a seller need to sell the note at a discount and can loose money or even if a seller sells the note a discount he shouldnt looks his principal if he can how should he avoid this, would he have to lower interest and increase the payments before 5 years?

[Mike Hartzog]

Agreed, but I would say rate is far more important than term.  For example, if an investor buys a 9.9% 30 year note, he can collect payments on if for a few years and sell it at par because the rate is in the yield range that private investors are looking for.  My point is, that if the rate is right, the investor can get out of the deal at any time by simply selling the note, and selling the note in that case achieves the same thing as a balloon, i.e., a full payoff.