As the holder of an owner-financed mortgage, perhaps you have experienced a similar situation like the following; when it was time to sell your mortgage note, the buyer was only interested in purchasing the note at a discount. It seems odd that the buyer would only want to acquire your valuable note at a reduced rate and you are disappointed!   

The factors contributing to the final purchase price of a note are extensive, and it is of benefit to note sellers to be aware of the following causes that may lead to a discounted note:

Time Value of Money

A dollar today is worth more than a dollar in the future. For example, most people will take .00 today rather than .00 in twenty years. A buyer may offer less for your note, but because it is present money, the amount is technically worth about the same as a future price when the inflation rules are taken into account. 

Owner Financing

Most of the time, consumers choose to owner-finance due to the note not fitting traditional financing. Owner financing has been proven to create more risk for the buyer and requires a more significant discount.  

Nonstandard Terms

Deviant or nonstandard stipulations in your note, such as interest-only and a balloon, are sources that may lead to a reduction in the buying price. 

Unconventional Collateral

Similar to nonstandard terms, buyers are also ill at ease with unconventional collateral concerning property which could prompt a discount due to the liability.


Issues that arise with an appraisal create uncertainty for the buyer. Ensure your property is in satisfactory order and consider the appraisal a serious part of the buying process.

Unkempt, damaged home interior cartoon.

Insufficient Documentation

New and emphasized rules and regulations such as the Dodd-Frank Act make it challenging for a bank or other traditional lender to write a note and require complete legal documentation. A lightly documented mortgage note can be written at a cost but is uncertain for the buyer and ultimately leads to a discount.  

Mortgage Buying Companies

Companies who buy owner-financed mortgages require a leap of faith with every purchase, and sellers must consider their risks and the necessity of higher yields to continue to provide excellent service.

Credit Rating

An excellent credit rating reduces the discount when selling your note.

Credit History. Ballpoint pen on Credit History (Credit Report). Focus on the end of ballpoint pen. Shallow depth of field. Black and White. Close-up.

Length of Term

Typically, the shorter the term, the smaller the discount.

Local Market Health

A local healthy real estate market is excellent and may affect the discount in the seller’s favor!


Seasoning refers to the life of the note, for example, how long a note has been established and the length of payment time. These factors influence the discount.

Pay Record

A positive and timely pay record could boost the purchase price of your owner-financed note.

Buy My Mortgage Note

As illustrated, the circumstances contributing to the final purchase price are extensive and alter the discount from the mortgage buyer. The national and global real estate market also play a role in the value of a note, like the real estate crash experienced in 2008. While it is wise to be familiar with the various reasons for a discounted note, be sensible and realistic and do not worry too much about these risks when seeking a buyer for your mortgage note.

American Equity Funding endeavors to offer a fair and honest price on every note purchased. Don’t hesitate to contact us with any questions you may have and if we may be of service in selling your note!