Your Borrower Has A Perfect Payment Record. How Could Your Note Be Losing Value?
Your Borrower Has A
Perfect Payment Record.
How Could Your Note
Be Losing Value?
Your buyer has never missed a payment. Not once. Every month like clockwork the payment arrives and everything seems fine.
So why would what your note sells for be going down?
Most note holders assume a perfect payment record means their note is in great shape. It means their buyer is reliable. It means everything is working as it should.
And they are right — about the payment record.
But what your note will sell for on the open market is driven by much more than whether your buyer pays on time. And some of those factors have nothing to do with your buyer at all.
The Disconnect Most Note Holders Never Understand
Your note has two completely separate values.
The first is the balance owed — what your buyer still owes you. That number goes down every month as payments are made. Predictable. Straightforward.
The second is the market value — what someone would actually pay you for your note today. That number moves based on risk factors that have nothing to do with whether your buyer made last month's payment.
Most note holders confuse these two numbers. They assume because the balance is going down and the payments are coming in their note is worth more over time.
Sometimes that is true. Sometimes it is not.
What Actually Drives Your Note's Market Value
Note buyers price risk. The lower the risk your note represents the more they will pay for it. The higher the risk the steeper the discount.
Here is what creates risk — and what can change it after closing without you ever knowing.
Your Buyer's Credit
Your buyer's credit score at closing was one snapshot in time. Since then they have been living their financial life.
New debt. Credit card balances. A car loan. A medical bill that went to collections. A job change that reduced their income. Any of these can drop their credit score significantly since the day they signed your note.
A buyer with deteriorating credit is a higher risk note. Higher risk means a lower sale price — even with a perfect payment record.
The Property Value
The property securing your note is your collateral. Its value directly affects your note's risk profile.
If property values in that market have declined since closing your collateral cushion has shrunk. Less equity means more risk for a note buyer. More risk means a lower price for you.
This can happen even in a market that seems stable. Neighborhood changes. New development nearby. Local economic shifts. All of it affects property value and therefore your note's market value.
Interest Rates
When you created your note you locked in an interest rate. That rate stays fixed for the life of the note.
But the market moves. When prevailing interest rates rise your note's fixed rate becomes less attractive to buyers compared to what they could get elsewhere. That reduces demand for your note and puts downward pressure on what it will sell for.
This has nothing to do with your buyer. Nothing to do with your payment record. It is simply the market moving around your fixed rate note.
Remaining Term
As your note ages the remaining term gets shorter. A shorter remaining term means less total income for a note buyer and potentially less time to recover from any problems that might arise.
In some cases a shorter remaining term is a positive — less risk exposure. In others it reduces the appeal to buyers. It depends on the overall risk profile of your note.
The Perfect Payment Paradox
Here is what makes this so surprising to most note holders.
Your buyer can make every single payment on time for years. Their payment record can be spotless. And your note can still be worth less today than it was at closing — because of factors that have nothing to do with whether they pay.
The market does not just reward payment history. It prices the entire risk picture. Payment history is one piece. Credit. Property value. Interest rates. Documentation. Remaining term. All of it goes into the number a note buyer puts in front of you.
A perfect payment record on a note with deteriorating credit, declining property value, and rising interest rates is still a discounted note.
That is the reality most note holders never hear until they need to sell.
What You Can Do About It
You cannot control interest rates. You cannot control the real estate market in your borrower's neighborhood.
But you can know where your note stands right now — before you need to sell.
Note holders who know their note's current market value have leverage. They know what is driving the price. They know what can be improved. They know when an offer is fair and when it is not.
Note holders who find out at the moment they need cash have no leverage at all. They take whatever number they are given because they have no time and no options.
The difference between those two note holders is one conversation.
Want To Know What Your Note Is Really Worth Right Now?
Call 352-99-LEARN (352-995-3276) and our Senior Seller Financed Note Advisor, Dawn, will personally reach out to discuss your note's current market value and what is driving it.
Or CLICK BELOW fill out our online worksheet at:
SUBMIT ONLINE MORTGAGE WORKSHEET
No cost. No obligation. No pressure. Just an honest conversation about what you are holding and what it is worth right now.
About Moxxie Asset Group
Moxxie Asset Group works exclusively with seller financed mortgage note holders across the United States. We help note holders understand exactly what they have, know all of their options, and make informed decisions, whether they ever plan to sell or not.
Want to know what your note is worth right now?
Call 352-99-LEARN (352-995-3276) and our Senior Seller Financing Advisor Dawn will personally reach out to discuss your note's value and options. There is no cost, no obligation, and no pressure, just an honest conversation about what you are holding.
