How to Sell Your Land Note in Texas: The Complete 2026 Guide

If you carried back financing when you sold a piece of land in Texas, you own something valuable: a land note. It's a stream of future payments backed by real property. But what happens when you need that money now — for a new investment, a medical expense, retirement, or simply because you're tired of chasing monthly payments?

You sell the note. And if you do it right, you can convert years of future payments into a lump sum of cash in as little as two to three weeks.

This guide covers everything you need to know about selling a land note in Texas in 2026 — from how buyers determine your note's value to the exact documents you'll need, the tax implications, and how to avoid the most common mistakes sellers make.

What Exactly Is a Land Note?

A land note — sometimes called a seller-financed note, carry-back note, or owner-financed note — is created when a property seller acts as the bank. Instead of the buyer getting a traditional mortgage, the seller and buyer agree on a price, interest rate, and payment schedule. The buyer makes monthly payments directly to the seller.

The legal instrument is typically a promissory note (the buyer's promise to pay) secured by either a deed of trust or a contract for deed (which gives the seller the right to take the property back if the buyer defaults).

In Texas, seller financing is extremely common for land transactions — especially for rural acreage, lots in developing subdivisions, and smaller parcels where traditional lenders won't provide a mortgage. That means there are thousands of note holders across the state who may not realize their note can be sold for cash.

Why Would You Sell Your Land Note?

Note holders sell for all kinds of reasons. After buying Texas notes for over 42 years, here are the situations we see most often:

• You need a lump sum of cash. Whether it's for a down payment on a new property, a business opportunity, medical bills, or college tuition — waiting 10 or 20 years for all your payments doesn't help when you need money now.
• You're tired of being the bank. Collecting payments, tracking late pays, dealing with escrow accounts, managing insurance requirements — it's work. Selling the note means someone else handles all of that.
• You're concerned about default risk. If your buyer stops paying, you're stuck with the cost and hassle of foreclosure. Selling the note transfers that risk to the buyer of the note.
• You want to reinvest. Many note holders sell to free up capital for higher-return investments — real estate, stocks, or a new business venture.
• Estate planning and simplification. Notes can be complicated to divide among heirs. Converting to cash simplifies your estate considerably.
• Divorce or partnership dissolution. When assets need to be split, a note is hard to divide. Cash is straightforward.

There is no wrong reason to sell. The question is whether you can get a price that makes sense for your situation.

How Is a Land Note Valued? The 7 Key Factors

This is where most note sellers have the biggest questions. Your note won't sell for its full remaining balance — just like a bond doesn't always trade at par value. The purchase price is determined by the risk profile of the note and the time value of money.

Here are the seven factors that matter most:

1. Payment History (Seasoning)

A note with 12 or more months of on-time payments is worth significantly more than a brand-new note. Payment history proves the buyer is willing and able to pay. We call this seasoning, and it's one of the biggest factors in pricing. A note with 24+ months of perfect payments will command the best price.

2. Interest Rate

Higher interest rates mean more income for the note buyer, which means a higher purchase price for you. Notes at 8% or above are attractive. Notes below 5% are harder to sell at a good price because the yield doesn't compensate for the risk.

3. Remaining Balance and Term

A $150,000 note with 20 years remaining is valued differently than a $30,000 note with 5 years left. Generally, shorter remaining terms are easier to price favorably because there's less time for things to go wrong.

4. Loan-to-Value Ratio (LTV)

If the property is worth $100,000 and the note balance is $60,000, that's a 60% LTV — very favorable. If the note balance is $95,000, that's 95% LTV — much riskier. Lower LTV means more equity cushion, which means a better price for your note. Under 70% LTV is ideal.

5. Property Type and Location

A note secured by a residential property in a growing Texas suburb is worth more than one secured by raw, landlocked acreage in a remote county. Improved land (with a house, septic, well, or utilities) commands better pricing than vacant lots.

6. Buyer's Credit Profile

The creditworthiness of the person making payments matters. A buyer with a 700+ credit score and stable employment reduces risk. If you don't have the buyer's credit information, that's okay — note buyers can work with what's available, but having it helps pricing.

7. Down Payment Made

The more the buyer put down at closing, the better. A 20% or higher down payment shows commitment and creates immediate equity. Notes with less than 10% down are harder to sell at top dollar.

Direct Buyer vs. Broker: Which Is Better?

When you decide to sell, you have two paths:

A note broker is a middleman. They take your note information, shop it around to multiple buyers, and take a commission — typically 2% to 10% of the sale price. The advantage is they know the market. The disadvantage is that their fee reduces your net proceeds, and the process usually takes longer because there's an extra layer of communication.

A direct buyer purchases the note with their own funds (or their investors' funds). There is no middleman fee. You get a quote directly, negotiate directly, and close directly. The process is typically faster and more straightforward.

At Longhorn Money Services, we are direct buyers. We've been purchasing notes across Texas since 1983 with our own capital. When we give you a quote, that's what we pay — no commissions, no hidden fees, no surprises at closing. We close what we quote.

The Step-by-Step Process of Selling Your Land Note

Here's exactly what happens from the moment you decide to sell to the day you receive your funds:

Step 1: Submit Your Note Details

Contact us by phone at (210) 828-3573 or submit your note information through our online form. We'll need the basics: remaining balance, interest rate, monthly payment amount, number of payments left, property address, and whether payments are current.

Step 2: Receive Your Cash Offer (Within 24 Hours)

We personally review every note — no algorithms, no automated lowball offers. Sandy Henderson, our founder, has been valuing Texas notes since 1983. You'll receive a fair, transparent offer within 24 hours of submitting your information. We explain exactly how we arrived at the number.

Step 3: Accept the Offer

If the offer works for you, we send a simple purchase agreement for your review and signature. There's no obligation at any point — if you want to think about it, take all the time you need.

Step 4: Due Diligence (We Handle This)

Once you accept, our team orders a title search, verifies the property value, confirms the payment history, and reviews the underlying documents. This typically takes 7 to 14 business days. We handle the cost of due diligence — you don't pay anything.

Step 5: Closing and Funding

We use a licensed title company or closing attorney to handle the transfer. The note assignment is recorded, the buyer of the property is notified of the new payment address, and your funds are wired directly to your bank account. Total timeline from offer to funding: typically 2 to 4 weeks.

Full Sale vs. Partial Sale: You Have Options

You don't have to sell your entire note. There are two approaches:

Full sale: You sell the entire remaining balance and all future payments. You receive a lump sum and are completely done with the note. This is the most common option and gives you the largest upfront payment.

Partial sale: You sell a portion of your future payments — for example, the next 60 payments out of 180 remaining. You receive a lump sum now, and after those 60 payments are collected by the buyer, the note reverts back to you and you resume collecting payments. This option works well if you need some cash now but want to preserve part of your income stream.

Partial sales typically result in a lower discount to face value because the note buyer's risk window is shorter. We can structure a partial purchase in almost any way that works for your situation.

What Documents Do You Need?

Having your documents organized speeds up the process and can improve your offer. Here's what we'll eventually need:

• The original promissory note (or a copy)
• The deed of trust or contract for deed
• Payment history — a record of payments received, dates, and amounts
• Property tax records — confirming taxes are current
• Insurance information — if applicable to the property type
• The closing statement (HUD-1 or settlement statement) from the original sale
• Any modifications or amendments to the original terms

Don't worry if you can't find everything. We can work with what you have and help track down missing documents through county records and title searches.

Tax Implications of Selling Your Note

Important disclaimer: we are not tax advisors. Always consult a CPA or tax attorney for your specific situation. That said, here's a general overview of what to expect:

When you sell a note, the IRS treats it as a sale of an asset. The tax treatment depends on how much you originally paid for the note (your basis) versus what you sell it for. If you created the note by seller-financing a property sale, your basis is typically the original purchase price of the property plus improvements, minus depreciation.

The gain may be treated as capital gains (long-term if you've held the note for more than one year) or as ordinary income, depending on the specifics. If you were reporting the original sale on the installment method (IRS Form 6252), selling the note accelerates the remaining gain into the tax year of the sale.

The key takeaway: plan ahead. Talk to your tax professional before you sell so there are no surprises at tax time. Many sellers find that even after taxes, converting a note to cash and reinvesting produces a better overall return than continuing to collect monthly payments.

Texas-Specific Legal Considerations

Texas has some unique laws that affect seller-financed notes:

• Texas Property Code Chapter 5: Governs executory contracts (contracts for deed). There are strict disclosure requirements and specific procedures for default and forfeiture. If your note is structured as a contract for deed, compliance with Chapter 5 is critical.
• Deed of trust foreclosure: Texas is a non-judicial foreclosure state, meaning foreclosure can proceed without going to court. This makes notes secured by deeds of trust more attractive to buyers because the remedy for default is faster and less expensive.
• Homestead protections: Texas has strong homestead laws. If the property secured by the note is the buyer's homestead, there are additional protections that can affect foreclosure timelines and procedures.
• SAFE Act and Dodd-Frank: Federal regulations limit how many seller-financed transactions an individual can do per year before needing a mortgage loan originator license. This doesn't typically affect selling an existing note, but it's worth understanding if you do multiple seller-financed deals.

Working with an experienced Texas note buyer who understands these laws ensures a smooth, compliant transaction. We've navigated every type of Texas note structure over the past four decades.

5 Common Mistakes to Avoid When Selling Your Note

• Not getting multiple opinions on value. Even if you go with a direct buyer, it helps to understand the market. Get at least one other quote so you know your offer is fair.
• Waiting until you're desperate. If you sell under time pressure, you have less negotiating power. The best time to explore selling is when you have options, not when you're in a financial emergency.
• Ignoring the buyer's payment history. If your note buyer has been late on payments, address it before trying to sell. Bringing the note current improves your price significantly.
• Not understanding the discount. Every note sells at some discount to face value. This isn't a scam — it's the time value of money and risk compensation. A reputable buyer will explain exactly how they calculated the price.
• Using a buyer who doesn't know Texas law. Out-of-state buyers may not understand Texas-specific structures like contracts for deed under Chapter 5. Work with someone who knows the state.

Why Sell to Longhorn Money Services?

• 42+ years in the business. Sandy Henderson founded Longhorn Money Services in 1983. We've been buying Texas notes longer than most companies have existed.
• Direct buyer — no middlemen. We buy with our own funds. No broker fees, no commissions, no surprises.
• We close what we quote. Our reputation depends on follow-through. The offer we give you is the amount you receive.
• 24-hour offers. Submit your note today, have a fair cash offer tomorrow.
• Texas-based, Texas-focused. We work exclusively in Texas. We know the counties, the markets, the laws, and the quirks of Texas real estate notes.
• No obligation, ever. Get a quote, think about it, ask questions. There is never any pressure to sell.

Frequently Asked Questions