The basics of a real estate note
A real estate note (also called a promissory note) is a written promise in which a borrower agrees to repay a lender a specific amount of money over time, usually with interest. When that loan is secured by real estate through a mortgage or deed of trust, it becomes a real estate note. If you sold a house and agreed to let the buyer pay you in installments, you created seller financing — and you're now the note holder.
Key parts of a note
Notes vary, but most include a few essential terms. Knowing these helps you understand what you own and what a buyer looks at when pricing it.
- •Unpaid principal balance — the remaining amount still owed
- •Interest rate — the annual rate charged on the balance
- •Monthly payment and amortization schedule
- •Term — how long the borrower has to repay
- •Collateral — the property securing the note
- •Position — first lien or subordinate (second) lien
Who this is for
This is for anyone who sold real estate and financed the buyer directly, or who inherited or purchased a privately held mortgage. If you receive monthly payments from a buyer instead of a lump sum at closing, you likely hold a real estate note that can be sold for cash.
Typical next steps
If you'd rather have cash now than wait out years of payments, gather your note documents (the note, mortgage or deed of trust, and payment history). Then submit basic details for a quote. You can sell the entire note or just a portion of the remaining payments.
Frequently Asked Questions
Is a real estate note the same as a mortgage?
Not exactly. The note is the promise to repay; the mortgage or deed of trust is the security instrument that ties the promise to the property. Both are typically involved when you carry seller financing.
Can I sell only part of my note?
Yes. A partial buyout lets you sell a set number of future payments while keeping the rest of the note — useful when you need some cash now but want to preserve long-term income.
What documents do I need to get a quote?
Usually the original promissory note, the recorded mortgage or deed of trust, and a payment history. Additional closing documents may be requested later.
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