Florida Estate Property — $1,000,000 Mortgage Note Sale

The Note

The seller had created a seller-financed mortgage note on an estate property in Sanford, Florida, in February 2024. The property is a 5-bedroom, 6-bathroom main residence totaling 4,035 square feet, situated on 13.75 acres. The grounds include a pool, a guest house, a barn, a storage garage, and fenced pastures. The property also operates as a licensed wedding and event venue. The sale price at the time of origination was $2,200,000, with an appraised value of $2,400,000 as of June 2024.

The borrower made a down payment of $1,200,000, which represented 54.5% of the purchase price. The remaining $1,000,000 was structured as an interest-only note at 8.75%, with monthly payments of $7,291.67 and a 36-month balloon. By the time the seller contacted us, the borrower had made 9 consecutive on-time payments. The property was owner-occupied, and the borrower's credit score fell in the 751-800 range (Excellent).

How We Evaluated This Note

When this file came across our desk, we looked at the same four factors we evaluate on every note: down payment and equity, borrower credit, payment history, and loan structure. On this particular deal, virtually every factor was working in the seller's favor.

The dominant factor was the down payment. The borrower put $1,200,000 in cash into a $2,200,000 purchase, which means the borrower invested more money into this deal than the entire note balance. A 54.5% down payment translates to a loan-to-value ratio of approximately 42% against the appraised value of $2,400,000. From an investor's perspective, a borrower who has that much cash equity in a property represents an extremely low default risk. Walking away from a $1.2 million down payment is not a rational economic decision.

The borrower's credit score in the 751-800 range further reinforced the strength of this file. An 8.75% interest rate was above market at the time, which provided a strong yield to the purchasing investor. The 36-month balloon structure meant the investor's capital would not be tied up long-term, and the interest-only payments kept the math clean. Nine consecutive on-time payments provided enough seasoning to verify the borrower's willingness and ability to pay.

The one factor that would normally introduce pricing risk on a deal like this is the property type. A 13-acre estate that doubles as a wedding venue is not a conventional residential property, and special-use properties typically attract fewer investors on the secondary market. However, the borrower's equity position was so strong that it completely offset any collateral-type discount. When an investor is purchasing a $1,000,000 note secured by a property appraised at $2,400,000, the property type becomes a secondary consideration. The collateral coverage is the story.

What the Seller Received

The seller received $905,416.66 in cash at closing, which represented 90.5% of the unpaid principal balance of $1,000,000.00. The investor pay price was $940,000.00, with the difference between the investor price and the net to seller covering the transaction costs associated with the sale. The transaction closed on January 21, 2025.

On a million-dollar note, 90.5% is a strong result. For context, mortgage note pricing on the secondary market typically ranges from 65% to 95% of the unpaid balance, depending on the characteristics of the individual deal. This note landed near the top of that range because the fundamentals were near-perfect.

What This Means for Note Holders

This deal is a textbook example of how the down payment collected at origination drives secondary market pricing more than any other single factor. The borrower's $1,200,000 cash investment in the property gave investors the confidence to price this note aggressively, even though the property itself was unconventional. No amount of good credit or clean payment history can substitute for that kind of equity position, but when you have all three working together, you get 90 cents on the dollar on a million-dollar note.

The interest rate mattered as well. At 8.75%, the note was yielding well above the cost of capital for most institutional and private investors, which made the deal attractive on a cash-flow basis in addition to the collateral story. A below-market interest rate on this same deal would have pushed the pricing down, even with the same equity and credit profile. We cover this dynamic in detail in our guide on how to create a mortgage note for resale.

If you are considering seller financing a property, especially an unconventional or high-value property, the lesson from this transaction is clear: collect as large a down payment as possible and set the interest rate at or above market. Those two decisions at origination will determine what your note is worth on the secondary market more than anything else you do.

If you already hold a mortgage note and you are ready to sell, we provide free, no-obligation quotes within 48 hours. Good luck.