Selling your mortgage note, also known as a real-estate note or promissory notes, can be confusing. This is especially true if you’re a first-time note holder who has never dealt with a buyer. This series, “Selling Real Estate Note 101”, is intended to provide information for these people.

In a previous article, we discussed the most common reasons people sell their mortgage notes as well as how that process works. We haven’t covered the possibility to sell only a portion of your mortgage note (also known as a partial). These are some common questions regarding partials.

Why sell only a portion of the note?

1. The note seller might not be able find a buyer for its full value in difficult economic times. Or, the seller might have to accept a larger discount. How is the note valued?.
2. Sometimes, the seller needs only a small amount of cash to pay for a specific purpose (college tuition, unexpected bills, etc.).
3. A partial Note can be sold to provide immediate cash flow and the buyer the right to receive the note in the future, once the terms of the partial sale have been met.
4. Sellers have the option to sell additional notes at a later date if they so desire.
5. Selling a partial note will often net the seller more money in the long-term.
6. A partial note seller might also have the advantage of delaying capital gains taxes.
7. It’s easier to locate a buyer for a mortgage note, since purchasing a partial note is considered less risky.

What does a partial work?

1. A full note sale means that the buyer buys the entire note amount, including all remaining payments. A partial means that the buyer agrees not to purchase all of the note. This is usually done in the form of a set number of payments, such as 60 monthly. 60 monthly payments or a specific amount of the balloon payment are examples of partial sales. Split partial sales are where the note seller splits the monthly payments. Contact us for more information about partial note sales.
2. Note investors typically require a minimum note balance to invest in a partial note.
3. Selling a partial note on a mortgage is similar to selling a complete note. For more information about the process and required paperwork, please refer to How Do I Sell My Mortgage Note?.

A partial can result in a win-win situation if it lowers the discount.
The seller makes it easier for the buyer to invest. Talk to us about your options
Give us a call if you have any questions or a partial sale.

Next week we’ll be sharing more tips on how to sell a mortgage loan. Please
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