North Carolina Mountain Property Note Sale

The Note

The seller had created a seller-financed mortgage note on a single-family home in the mountain region of Western North Carolina. The property is a 4-bedroom, 4-bathroom residence spanning 3,750 square feet on a 9,583-square-foot lot in a desirable mountain community. The original sale took place in February 2023, and the property sold for $800,000.

The buyer put down $100,000 (12.5% of the purchase price), and the seller carried back a note for the remaining $700,000. The note was structured with a 6.5% interest rate, monthly payments of $4,000, and a 60-month (5-year) term with a balloon payment of $689,276 due in February 2028. This is a short-term balloon structure, not a traditional 30-year amortization.

By the time the seller contacted us, the borrower had made 34 consecutive on-time monthly payments. The property was owner-occupied, and a realtor opinion of value placed the current market value at approximately $1,100,000 — a significant appreciation from the $800,000 sale price just under three years earlier.

How We Evaluated This Note

This note checked virtually every box that drives premium pricing on the secondary market. We look at the same four core factors on every deal — down payment and equity, borrower credit, payment history, and loan structure — and this one was strong across the board.

The single most important factor was the collateral position. At the time of our acquisition, the note balance was approximately $692,000 against a property valued at $1,100,000. That translates to a loan-to-value ratio of roughly 63%. In the note business, an LTV below 70% is considered excellent, and this one was well inside that threshold. The property had appreciated from $800,000 at the time of sale to $1,100,000 per the realtor's opinion, which created a substantial equity cushion that protects both the borrower and any subsequent note holder in a downside scenario.

The 12.5% down payment was below the 20% minimum we typically recommend. We cover this in our guide on how to create a mortgage note for resale. However, the property appreciation since origination more than compensated for the lower initial down payment. The equity position at the time of sale was far stronger than the equity position at origination, and that is what matters when pricing is determined.

The short 5-year balloon term was also a significant positive. A shorter remaining term means the investor recovers capital faster, which reduces duration risk. With only 26 payments remaining and a balloon of $689,276 due in February 2028, the investor's timeline to full recovery was relatively compressed. This reduces the discount required to hit target yield.

The payment history was clean — 34 consecutive on-time payments with no lates recorded. The borrower's credit was pulled at origination and was strong enough to support investor pricing at 96.25% of unpaid balance. Title insurance was in place, which eliminates one of the common friction points in note transactions.

What the Seller Received

The seller received $650,000 in cash at closing, which represented 93.97% of the unpaid principal balance of $691,743.40. The transaction closed on January 22, 2026. The investor quote came in at $665,803.02 (96.25% of UPB), and after all transaction costs — title update, appraisal, and closing fees — the net to the seller was $650,000. All closing costs were paid from the proceeds; the seller paid zero out of pocket.

This is the highest payout percentage in our published case study portfolio, and it is not a coincidence. Every factor that drives note pricing was working in this seller's favor.

Why This Deal Priced So High

We publish these case studies so note holders can see what actually moves the needle on pricing. This transaction is the showcase example. The combination of factors that produced a 94-cent-on-the-dollar outcome included:

First, massive equity. The property was worth $1,100,000 against a note balance of $692,000. That 63% LTV gave the investor a large cushion in the event of default. Second, a short remaining term. With only 26 months to the balloon, the investor's capital was not tied up for decades. Third, 34 on-time payments with zero lates. The borrower had demonstrated a consistent willingness and ability to pay. Fourth, title insurance was in place, removing a documentation risk that trips up many transactions. And fifth, the 6.5% interest rate was at market, meaning the investor yield was not compressed by a below-market coupon.

The 12.5% down payment at origination is the only factor that worked against this note. We always recommend a minimum of 20% down when seller financing a property, and we stand by that advice. But in this case, the property appreciation created equity that more than filled the gap. The collateral position at the time of sale was significantly stronger than it was at origination, and that is ultimately what investors price off of.

If you hold a mortgage note and want to understand what drives pricing, this deal proves the point: strong collateral position, clean documentation, consistent payment history, and a manageable remaining term can produce pricing above 90 cents on the dollar. That is as good as it gets in the secondary note market.

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