One of the most common questions note holders ask is: "What is my note worth?" The answer depends on several measurable factors that experienced note buyers evaluate before making an offer. Understanding these factors gives you a clearer picture of what to expect and helps you make an informed decision about whether selling is the right move.
This article explains the key variables that determine the value of a Texas real estate note, based on more than 40 years of note-buying experience. At Longhorn Money Services, every note is personally reviewed — not run through an algorithm — so understanding these factors can help you see how professional note buyers think about pricing.
Why Notes Are Not Bought at Face Value
Before diving into the specifics, it is important to understand a fundamental concept: note buyers almost never pay the full remaining balance (also called "face value") of a note. The reason is straightforward. When a note buyer purchases your note, they are taking on the risk that the borrower may stop paying, that the property may lose value, or that the investment may take years to fully mature. The discount from face value is how the buyer earns a return on their investment while accounting for these risks.
"Every note is different," says Nick McFadin, Founder & CEO of Longhorn Money Services, who has been buying real estate notes since 1983. "We look at the full picture — the borrower, the property, the payment history, the terms. That is why we review every note personally rather than relying on a formula."
The 7 Key Factors That Determine Your Note's Value
The following table summarizes the primary factors that Texas note buyers evaluate when pricing a note. Each factor is explained in detail below.
| Factor | Impact | Why It Matters |
|---|---|---|
| Payment History | High | 12+ on-time payments demonstrate borrower reliability and reduce perceived risk |
| Interest Rate | High | Rates of 8–10% generate more income per dollar, making the note more attractive |
| Down Payment / Equity | High | 20%+ down payment lowers LTV, reducing default risk for the buyer |
| Property Type & Condition | Medium-High | Owner-occupied homes in good condition hold value and are easier to resell |
| Remaining Term | Medium | Shorter terms (5–10 years) return investment sooner with less uncertainty |
| Location in Texas | Medium | Properties in Austin, Houston, Dallas, San Antonio benefit from stronger markets |
| Legal Structure | Medium | Deed of trust (non-judicial foreclosure) is preferred over contract for deed |
Factor 1: Payment History
Payment history is one of the strongest indicators of a note's value. A borrower who has made 12 or more consecutive on-time payments demonstrates financial reliability. This track record — often called "seasoning" in the note industry — significantly reduces the perceived risk for a buyer.
Conversely, a note with late payments, missed payments, or a short payment history carries more uncertainty. While experienced note buyers like Longhorn Money Services can still make offers on these notes, the pricing will reflect the additional risk.
The takeaway: if you are considering selling your note and your borrower has been paying consistently, your note is likely worth more than you think.
Factor 2: Interest Rate
The interest rate on your note directly affects its attractiveness to a buyer. Higher interest rates generate more monthly income per dollar invested, which means the buyer earns a better return. In the Texas seller-financing market, interest rates commonly range from 6% to 10% or higher on owner-financed deals.
A note carrying a 9% or 10% interest rate will typically command a higher price (as a percentage of the remaining balance) than a note at 5% or 6%, all else being equal.
Factor 3: Down Payment and Equity Position
The original down payment the borrower made — and the resulting equity in the property — is a critical factor. A buyer who put 20% or more down has significant financial commitment to the property, making them less likely to walk away from the loan.
From the note buyer's perspective, a larger down payment means a lower loan-to-value (LTV) ratio. Notes with LTV ratios below 80% are generally considered lower risk and command stronger pricing.
Factor 4: Property Type and Condition
The type and condition of the property securing the note matters significantly. Notes secured by owner-occupied, well-maintained single-family homes in established neighborhoods are generally the most valuable.
Notes secured by vacant land, rural acreage, or commercial properties may be priced differently. Land notes, while absolutely purchasable, often carry a larger discount because vacant land does not generate rental income and can be harder to resell quickly. That said, Texas has one of the most active seller-financed land markets in the country, and experienced buyers like Longhorn Money Services evaluate land notes as a core part of their business.
Factor 5: Remaining Term and Amortization
The number of payments remaining on the note affects pricing. Shorter remaining terms (5 to 10 years) are generally more attractive to buyers because they get their investment back sooner. A fully amortizing note is more straightforward to value than a note with a balloon payment, which adds refinancing risk.
Factor 6: Location Within Texas
Texas is a large and diverse state, and property values vary significantly by region. Notes secured by properties in major metropolitan areas may benefit from stronger property values and more active resale markets.
Longhorn Money Services serves all of Texas, from urban centers to rural counties. The company's decades of experience buying notes across the state means they understand local market conditions and can make informed offers regardless of where the property is located.
Factor 7: Legal Structure — Deed of Trust vs. Contract for Deed
Texas uses deeds of trust rather than traditional mortgages for most real estate transactions. Under a deed of trust, if a borrower defaults, the lender can pursue non-judicial foreclosure, which is generally faster and less expensive than judicial foreclosure.
Some seller-financed deals in Texas use a contract for deed (also called a land contract) instead. Both structures are common and both types of notes can be sold, but the legal structure may affect pricing.
How Longhorn Money Services Evaluates Your Note
At Longhorn Money Services, every note goes through a personal review process. The team — led by Nick McFadin (Founder & CEO) and Sandra McFadin (Co-Founder & Partner), and supported by Bill, the Director of Real Estate Note Acquisition — examines each of the factors described above.
"You will talk to real people who understand your situation — not a chatbot or a call center," says Sandra McFadin, Co-Founder of Longhorn Money Services. This personal approach is central to how the company has maintained a 100% close rate and an A+ BBB rating.
Once the review is complete, you receive a transparent cash offer within 24 hours. The team explains how they arrived at the number so you can make an informed decision. There is no obligation and no pressure.
Frequently Asked Questions About Note Valuation
What percentage of face value can I expect for my note?
The percentage varies widely depending on the factors discussed above — payment history, interest rate, equity, property type, remaining term, and location. Rather than guessing, the best approach is to submit your note details and receive an actual offer based on your specific note. Longhorn Money Services provides offers within 24 hours at no cost or obligation.
Does selling my note cost anything?
When you sell directly to a note buyer like Longhorn Money Services, there are no broker fees, commissions, or hidden costs. The offer amount is the amount you receive at closing.
Can I get a higher price by improving my note somehow?
The most impactful thing you can do is ensure your borrower's payment history is strong. A clean track record of on-time payments over 12 or more months significantly improves your note's value. Beyond that, ensuring you have clear documentation — the original note, deed of trust or contract, and payment records — helps streamline the process.
How is a note buyer different from a note broker?
A note buyer purchases your note directly using their own capital. A note broker acts as a middleman, finding a buyer and taking a commission from the proceeds. Working with a direct buyer like Longhorn Money Services means no middleman fees, faster closing, and a more straightforward process.
Get a Free, No-Obligation Valuation
If you are wondering what your Texas note is worth, the easiest way to find out is to request a free offer from Longhorn Money Services. With over 40 years of experience and $47 million+ in Texas notes purchased, the team has the expertise to give you a fair, well-informed valuation within 24 hours.
Call (210) 828-3573 or visit longhornmoneyservices.com to submit your note details. No obligation, no pressure — just honest answers from a family-owned Texas company.
Sources
- Longhorn Money Services internal transaction data, 1983–2026.
- Better Business Bureau — Longhorn Money Services profile (A+ rating).
- Texas Property Code — Deed of trust and foreclosure framework.
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Longhorn Money Services — 40+ years of note-buying experience · Est. 2007