California Land Note Sale

The Note

The seller had created a seller-financed note on an improved land parcel in Myers Flat, California (Humboldt County) in August 2023. The property is a 0.33-acre lot with water, septic, and power already connected — making it improved land rather than raw or vacant land. The original sale price was $109,000, with the buyer putting $30,000 down (approximately 27.5% of the purchase price). That left an original note amount of $79,000, structured as a 10-year fully amortizing loan at 8% interest with monthly payments of $958.49.

By the time this file reached our desk, the borrower had made 29 monthly payments — about 2.5 years of seasoning — bringing the unpaid principal balance down to $65,231.44. The property was owner-occupied, which is a favorable factor even on a land note. However, two significant issues emerged during due diligence: no borrower credit history was found on file (indicating a likely ITIN borrower), and no title insurance had been obtained at origination.

How We Evaluated This Note

Land notes are inherently harder to sell on the secondary market than residential notes. The collateral — land, even improved land — is less liquid than a house. If the borrower defaults, the recovery process is more complex, and the resale market for land is smaller and slower. These factors are baked into every land note valuation, and they result in deeper discounts compared to residential paper.

This particular note had two additional challenges beyond the land collateral type. First, no borrower credit history was found during the credit pull. This is common with ITIN borrowers (individuals who use an Individual Taxpayer Identification Number rather than a Social Security Number). Without a credit history, the investor has no third-party data to assess the borrower's overall financial reliability — the only evidence of creditworthiness is the payment history on this specific note. Second, no title insurance was obtained at origination. Title insurance protects the lien holder against defects in the title chain, and its absence introduces risk that the investor must account for in pricing.

On the positive side, the seller had made several smart structuring decisions. The 27.5% down payment was well above the minimum we recommend, which meant the borrower had significant cash invested in the property. The 8% interest rate was strong — higher rates produce more monthly cash flow and give the investor a better yield, which supports pricing. And the 10-year term meant the note would pay off relatively quickly, reducing the investor's exposure to long-term risk. We discuss these structuring principles in detail in our guide on how to create a mortgage note for resale.

What the Seller Received

The seller received $50,583.02 in cash at closing, which represented 77.5% of the unpaid principal balance of $65,231.44. The transaction closed on March 6, 2026. All costs associated with the sale were paid for by the purchasing entity. The seller paid zero out of pocket to complete the transaction.

What This Means for Note Holders

This deal demonstrates that land notes can sell — even with significant challenges — when the underlying structure is sound. The 27.5% down payment, 8% interest rate, and 10-year term were all strong decisions that supported the pricing. Without those structural strengths, a land note with no borrower credit and no title insurance would have traded at a substantially deeper discount, or may not have found a buyer at all.

For anyone considering seller financing a land sale, two lessons stand out. First, always obtain title insurance at origination — it is a relatively small cost that protects both you and any future buyer of the note. Second, collect as much documentation as possible on the borrower's ability to pay, even if a traditional credit report is not available. Bank statements, tax returns, and proof of income all help establish creditworthiness and support higher pricing on the secondary market.

We buy land notes nationwide, including improved land, raw land, and acreage. If you hold a land note and want to know what it is worth, we provide free, no-obligation quotes within 48 hours. Good luck.