If you’re holding a seller-financed mortgage note—whether it came from financing a buyer, carrying back a seller carry note, or converting equity into monthly payments—the first question you’re probably asking is:
“How much will a note buyer actually pay me?”
Not the theoretical answer.
Not marketplace hype.
Not the “up to 97% of UPB!” nonsense plastered across the internet.
You want real pricing, real valuation math, and the actual factors note buyers use in 2025 when making bids on seller-financed notes, performing notes, non-performing notes, and real estate secured paper.
You’re in the right place.
Here’s the truth—broken down like a professional mortgage note buyer, not a marketer.
✅ What Note Buyers Actually Look At Before Making Any Offer
A note isn’t priced based on what you want it to be worth.
It’s priced based on risk, performance, collateral strength, and documentation integrity.
Every legitimate buyer evaluates:
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Payment history / seasoning
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Property value (LTV ratio, AVM, BPO)
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Borrower credit behavior
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Down payment size
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Interest rate vs. current market rate
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Amortization, balloon, maturity date
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Lien position (1st lien vs 2nd lien)
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Documentation quality
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Title integrity
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State jurisdiction / foreclosure timeline
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Borrower communication patterns
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Servicing history
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Insurance & taxes (escrow/impounds)
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Default risk indicators
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Performance consistency
A strong note = premium pricing.
A weak note = deep discount.
✅ Average Pricing Ranges for Seller-Financed Notes (2025)
These are the real price ranges note buyers pay in the current market—based on collateral, borrower strength, LTV, documentation, and performance metrics.
1. Strong Performing Notes
Borrower pays on time • Solid down payment • Clean documentation file
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Typical Purchase Price: 85%–95% of UPB
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Best-case pricing: 96%–98% (seasoned, low LTV, strong credit behavior)
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Worst-case: ~80%
Why such strong pricing?
These notes behave like low-risk real estate-backed cash-flow assets with predictable yield.
Keywords enriched:
performing note pricing, seller-financed note buyers, mortgage note valuation, low LTV notes, seasoned notes.
2. Average Performing Notes
Some late payments • Tight LTV • Moderate down payment
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Typical Purchase Price: 75%–85% of UPB
More risk = wider discount.
Buyers want cushion against default, foreclosure timelines, and repayment uncertainty.
Keywords enriched:
late pays, moderate credit risk, mid-tier seller-financed notes, yield adjustment, risk-adjusted pricing.
3. Lightly Seasoned Notes (< 6 Months History)
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Typical Purchase Price: 65%–80% of UPB
Buyers need proof of performance.
Limited payment history increases borrower risk.
Keywords enriched:
light seasoning, new notes, unseasoned mortgage notes.
4. Non-Performing Seller-Financed Notes
Borrower is behind or has stopped paying.
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Typical Purchase Price: 40%–65% of property value
(NOT UPB — UPB is irrelevant.)
These are collateral-based investments, influenced by:
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foreclosure timeline
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state law
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collateral value
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equity position
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borrower engagement
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legal cost modeling
Keywords enriched:
non-performing note pricing, collateral-based valuation, foreclosure timeline, enforcement strategy.
5. High-Risk Notes
Bad documents • High LTV • Weak borrower profile
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Typical Purchase Price: 50%–70% of UPB
Pricing drops sharply when:
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no title insurance
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missing assignments
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incorrect legal descriptions
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no proof of payments
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inconsistent servicing records
Keywords enriched:
documentation defects, impaired notes, high LTV risk, chain of title issues.
✅ Key Pricing Drivers Sellers Don’t Realize Impact Their Offer
1. Down Payment Size
Biggest factor in pricing.
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20%+ down → top-tier offers
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<10% down → risk downgrade
Keywords enriched:
equity cushion, borrower skin in the game.
2. Interest Rate Spread
If your note rate is above today’s market rates, buyers pay more.
If it’s below, pricing tightens to match yield targets.
Keywords enriched:
yield spread, coupon rate vs market rate, discount rate calculation.
3. Property Type
Best pricing:
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Single-family residences
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1–4 unit residential
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Owner-occupied properties
Discounted pricing:
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Land
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Mobile homes
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Rural collateral
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Non-owner-occupied
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Unique or hard-to-value properties
Keywords enriched:
collateral class, property type risk, residential note pricing.
4. Borrower Behavior
Buyers study patterns:
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consistent on-time payments
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slow pays
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skipped months
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partial payments
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broken agreements
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payment volatility
Behavior predicts future performance more accurately than interest rates or UPB.
Keywords enriched:
borrower payment history, behavioral underwriting, repayment consistency.
5. Documentation Quality
Missing or weak documents destroy pricing:
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missing note or mortgage
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unrecorded assignments
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missing allonges
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incorrect legal descriptions
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gaps in chain of title
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unclear servicing history
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unpaid taxes
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insurance lapses
Documentation can shift a bid 5–20%.
Keywords enriched:
collateral file, assignment chain, title integrity, documentation audit.
✅ Real Example: What Buyers Actually Pay
Scenario:
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UPB: $180,000
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P&I: $1,255/mo
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Rate: 8.5%
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LTV: 70%
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Down payment: 22%
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14 months perfect pay history
Estimated Purchase Price: 92%–95% of UPB
Now change two variables:
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LTV = 90%
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Borrower late 4x
Estimated Purchase Price: 78%–84% of UPB
Documentation + borrower behavior decide pricing.
Keywords enriched:
note pricing example, yield modeling, real note buyer calculations.
✅ What Sellers Can Do to Increase Their Price
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Provide complete payment history (ledger, receipts, screenshots)
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Confirm insurance is active
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Ensure property taxes are paid
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Provide a clean collateral file (Note → Mortgage → Assignments → Allonges → Title)
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Use a licensed loan servicer
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Provide recent interior/exterior photos or BPO
Keywords enriched:
risk reduction, servicer verification, collateral documentation, payment ledger.
Small improvements → higher offer.
✅ Final Word: Buyers Pay for One Thing — Risk Reduction
Every real buyer — whether they run a $5M shop or a $500M fund — prices one thing:
Risk.
Reduce risk → higher price.
Increase risk → deeper discount.
It’s that simple.
If you want a real offer on your seller-financed note, I’ll give you the honest number — not the inflated, bait-and-switch nonsense.
Send the file.
I’ll tell you exactly what it’s worth and why.
—
Jeffery Hartman
Don of Debt | Fitzgerald Advisors
Note Buyer • Valuation Expert • Portfolio Advisor
