How Much Is My Land Note Worth in Texas? A Valuation Guide

If you hold a promissory note secured by land in Texas, one of the most natural questions you can ask is how much is my land note worth in Texas right now? The answer is not a single number that can be pulled from a chart or calculated with a simple formula. Your note's cash value — the amount a buyer would pay you today for the right to receive your future payments — depends on a web of interconnected factors that range from the borrower's payment history and the note's interest rate to the type and location of the land that serves as collateral. Understanding each of these factors and how they interact is the key to setting realistic expectations and ultimately getting the best price when you decide to sell.

This guide is designed to give you a thorough, practical understanding of how land note valuation works in Texas. Rather than offering vague generalizations, we will walk through each major factor that note buyers analyze, explain how it affects your note's cash value, and give you the context you need to estimate where your note falls on the pricing spectrum. By the time you finish reading, you will have a working knowledge of land note valuation that puts you on more equal footing with professional note buyers and enables you to evaluate any offer you receive with informed confidence.

Whether you are seriously considering selling your note right now or simply curious about what your asset is worth, this guide will give you the framework you need. The Texas land note market is active and liquid, and notes of almost every description are bought and sold every day. The question is not whether your note has value — it almost certainly does — but rather how much value, and what you can do to maximize it.

The Fundamental Concept Behind Land Note Valuation

Time Value of Money — Why Notes Are Worth Less Than Face Value

The single most important concept to understand about land note valuation is the time value of money. A dollar received today is worth more than a dollar received a year from now, and significantly more than a dollar received ten years from now. When you hold a land note, you own the right to receive a stream of future payments — monthly installments that will arrive over the remaining term of the note. A note buyer who purchases that payment stream from you needs to earn a return on their investment that compensates them for tying up their capital for the duration of those future payments. The difference between the total of your remaining payments and the cash a buyer will pay you today is the discount, and it exists because of this fundamental time value principle.

Think of it this way: if your note has a remaining balance of $50,000 and the borrower will pay that amount over the next ten years at six percent interest, the total cash flow the buyer will receive is approximately $66,600 (the $50,000 principal plus approximately $16,600 in interest). But the buyer does not have access to that $66,600 all at once — they receive it in small monthly installments over a decade. To justify locking up their capital for that period, the buyer needs to pay less than $50,000 today. How much less depends on the buyer's required rate of return and the specific risk characteristics of your note.

The Yield Requirement — How Buyers Calculate Their Purchase Price

Professional note buyers evaluate potential purchases using a concept called yield, which is the annualized return they will earn on their investment based on the price they pay. Different buyers have different yield requirements depending on their cost of capital, their risk tolerance, and the competitive dynamics of the market. In the Texas land note market, buyer yields typically range from ten to eighteen percent, with the specific yield for any given note depending on its risk profile.

Here is a simplified example of how this works. Suppose your note has a remaining balance of $40,000, a monthly payment of $450, an interest rate of eight percent, and 120 payments remaining. A buyer who requires a twelve percent yield on their investment would calculate the present value of 120 payments of $450 discounted at twelve percent per year, which comes to roughly $31,400. That is approximately what the buyer would be willing to pay for the note — a discount of about $8,600 from the remaining balance, or roughly twenty-one percent. If the buyer required a higher yield — say fifteen percent — because they perceived the note as riskier, the purchase price would be lower. If the buyer was comfortable with a ten percent yield because the note had excellent characteristics, the purchase price would be higher.

Why Every Note Is Priced Individually

Unlike stocks or bonds that trade on public exchanges at standardized prices, land notes are unique instruments with individual characteristics that must be evaluated on a case-by-case basis. No two notes have the same combination of borrower, payment history, interest rate, remaining balance, term, and collateral, which means no two notes will receive the same offer. This is why there is no simple online calculator that can tell you exactly how much your land note is worth — the answer depends on too many variables to be reduced to a formula that fits on a web page.

That said, understanding the major variables and their relative importance will give you a reliable framework for estimating your note's value and for evaluating any offers you receive. The sections that follow break down each major variable in detail so you can assess where your note stands and what kind of offer you might expect.

The Major Factors That Determine Your Land Note's Cash Value

Factor One — Payment History and Seasoning

The borrower's track record of making payments is the single most influential factor in determining your note's value. A note with a long history of consistent, on-time payments commands a significantly higher price than an otherwise identical note with a short or spotty payment record. This is because payment history is the most reliable predictor of future payment behavior — a borrower who has made thirty-six consecutive payments without a single late payment is overwhelmingly likely to continue performing, while a borrower who has missed payments or been chronically late presents a meaningfully higher risk of default.

Seasoning — the length of time since the first payment was made — is a closely related factor. Most note buyers have minimum seasoning requirements, typically six to twelve months, below which they will not purchase a note at all. Notes with twelve to twenty-three months of seasoning are considered moderately seasoned and receive competitive offers. Notes with twenty-four or more months of perfect payment history are considered well-seasoned and receive the best pricing. If your note has been performing for several years without any issues, you are in an excellent position to receive a strong offer. For a comprehensive overview of all the factors that influence pricing, this resource on what determines note value in Texas provides additional detail.

Factor Two — Interest Rate

The interest rate on your note directly affects the buyer's return and, consequently, how much they are willing to pay. Higher interest rates are better for you as the note seller because the buyer earns more income per dollar invested, which means they can pay you a higher percentage of the remaining balance while still achieving their target yield. Notes with interest rates of nine percent or above tend to receive the most favorable pricing in the Texas market, while notes with rates below six percent may receive deeper discounts because the buyer needs to make up for the lower income through a larger purchase discount.

To illustrate, consider two notes that are identical in every way except interest rate. Note A has a remaining balance of $40,000 with an interest rate of ten percent, and Note B has the same $40,000 balance with an interest rate of five percent. A buyer targeting a twelve percent yield would pay more for Note A because the ten percent coupon rate is closer to the buyer's target yield, requiring less of a price discount to bridge the gap. Note B, with its lower coupon, would need a significantly larger discount to give the buyer the same twelve percent return. The difference in purchase price between the two notes could easily be several thousand dollars, purely due to the interest rate differential.

Factor Three — Remaining Balance and Payment Amount

The remaining balance on your note affects its cash value in absolute terms — a note with a $100,000 balance is obviously worth more than a note with a $10,000 balance, all else being equal. But the remaining balance also affects pricing in percentage terms because of the fixed costs associated with purchasing a note. Every note purchase involves due diligence costs, title work, legal fees, and closing costs that are relatively consistent regardless of the note's size. For a large note, these costs represent a small fraction of the purchase price, but for a very small note, the same costs can eat into the buyer's return, leading to a deeper discount.

As a general guideline, notes with remaining balances below $10,000 tend to receive somewhat larger percentage discounts because the transaction costs are proportionally higher. Notes in the $20,000 to $100,000 range typically receive the most efficient pricing. Notes above $100,000 are more specialized and may require the buyer to partner with other investors or use more capital, which can occasionally introduce additional negotiation dynamics. The monthly payment amount also matters in a related way — higher payments mean the buyer recovers their investment faster, which reduces their risk and can improve pricing.

Factor Four — Loan-to-Value Ratio

The LTV ratio — the remaining note balance divided by the current market value of the land — is a critical risk metric for note buyers. A lower LTV means the borrower has more equity in the property, which means two important things: the borrower has more financial incentive to continue making payments rather than walking away, and the buyer has a larger cushion of collateral value protecting their investment in the event of default. Both of these factors reduce risk and support better pricing.

An LTV of fifty percent or below is considered excellent and will typically result in the best pricing. An LTV between fifty and seventy percent is considered good and will receive competitive offers. An LTV between seventy and eighty-five percent is considered moderate and may result in a somewhat deeper discount. An LTV above eighty-five percent is considered high and will usually generate the deepest discounts because the buyer has very little equity cushion if the borrower defaults. If you originated your note several years ago and land values in the area have appreciated, your current LTV may be significantly lower than it was at origination, which works in your favor.

Factor Five — Type and Location of the Collateral

The land that secures your note is the buyer's safety net, and its type, location, and characteristics have a meaningful impact on note pricing. Land types that are more desirable and more liquid — waterfront lots, suburban residential lots, parcels near growing cities — tend to support better note pricing because the buyer is confident they could resell the land at a favorable price if the borrower defaulted. Land types that are more remote, less liquid, or harder to value — deep rural acreage, parcels in economically declining areas, landlocked tracts with limited access — tend to result in deeper discounts because the buyer faces more uncertainty about collateral recovery.

Within Texas, location matters enormously. A note secured by a five-acre lot within commuting distance of Austin, Houston, San Antonio, or Dallas-Fort Worth will almost always receive better pricing than a note on a similar lot in a remote county with minimal economic activity. This is not a value judgment about the property — it is a reflection of the buyer's assessment of how quickly and at what price they could liquidate the collateral if necessary. If your property is in a strong market, that is a significant advantage when it comes to note pricing.

Factor Six — Note Structure and Terms

Beyond the interest rate, several other structural features of your note affect its cash value. Fully amortizing notes — where the monthly payment covers both principal and interest and the note will be paid in full by the end of the term — are the most straightforward for buyers to evaluate and typically receive the best pricing. Notes with balloon payments introduce refinancing risk, and the buyer will factor in the possibility that the borrower may not be able to pay or refinance the balloon when it comes due. Interest-only notes, where the monthly payment covers only interest and the principal is due in a lump sum, carry even more refinancing risk and generally receive deeper discounts.

The remaining term of the note also matters. Notes with shorter remaining terms are generally preferred because the buyer recovers their investment faster and is exposed to risk for a shorter period. A note with sixty remaining payments is typically priced more favorably on a percentage basis than a note with 180 remaining payments, assuming other factors are similar. If your note has features like prepayment penalties or default interest provisions, these can also affect pricing, sometimes positively and sometimes negatively depending on the specific provisions. For a detailed look at how discounts vary across different note structures, this article on discounts when selling a land note in Texas offers valuable context.

Estimating Your Note's Value — A Practical Framework

The Pricing Spectrum for Texas Land Notes

While every note is unique, the Texas land note market operates within a general pricing spectrum that can help you form an initial estimate of your note's cash value. At the favorable end of the spectrum, an exceptional note — one with extensive seasoning, perfect payment history, a high interest rate, a low LTV, and strong collateral in a desirable location — might sell at a discount of ten to fifteen percent of the remaining balance. In the middle of the spectrum, a solid note with good but not exceptional characteristics might sell at a discount of fifteen to twenty-five percent. At the less favorable end, a note with limited seasoning, lower interest rate, higher LTV, or collateral challenges might sell at a discount of twenty-five to thirty-five percent or more.

These ranges are broad generalizations, and your specific note could fall anywhere within or even outside of them depending on its unique combination of characteristics. The only way to know for certain what a buyer will pay for your note is to request an actual quote. However, by honestly evaluating your note against each of the factors described above, you can develop a reasonable expectation of where in the spectrum your note is likely to land.

A Step-by-Step Self-Assessment

To estimate your note's value, start by gathering the following information: the remaining balance, the monthly payment amount, the interest rate, the number of payments remaining, the date of the first payment (to calculate seasoning), a summary of the payment history (including any late payments), and a description of the collateral property including its type, location, size, and current estimated market value. With this information in hand, evaluate each of the major factors discussed above and mentally assign your note a rating of strong, average, or weak for each factor.

If your note rates strong on most or all factors, you are likely looking at a discount in the ten to twenty percent range. If your note has a mix of strong and average factors with no significant weaknesses, the fifteen to twenty-five percent range is a reasonable expectation. If your note has one or more significant weaknesses — such as limited seasoning, a high LTV, or collateral in a weak market — the discount may be twenty-five percent or more. This self-assessment is not a substitute for an actual quote from a buyer, but it will give you a ballpark sense of where things stand and help you evaluate any offers you receive.

Why Getting Multiple Quotes Is Important

The land note market is not as standardized as the stock market or the bond market, and different buyers may offer different prices for the same note based on their individual cost of capital, yield requirements, risk assessment, and portfolio strategy. Getting quotes from two or three reputable buyers is a smart move because it gives you a range of offers to compare and helps you identify the best deal. When comparing offers, look at the total net proceeds you will receive after any fees, not just the headline purchase price. Some buyers charge processing fees, due diligence fees, or other costs that reduce your net proceeds, while others — like Longhorn Note Buyers — provide all-in pricing with no hidden charges.

It is also important to compare the quality of the buyers, not just their quoted prices. A buyer who quotes a slightly lower price but has a 100% close rate and a track record of completing deals on time is often a better choice than a buyer who quotes higher but has a history of renegotiating during due diligence or failing to close. The certainty of closing has real value, and you should factor it into your decision alongside the quoted price.

Common Scenarios and Their Approximate Valuations

The Well-Seasoned Note on Desirable Collateral

Consider a note with a remaining balance of $60,000, an interest rate of nine percent, monthly payments of $575, sixty payments remaining, thirty-six months of perfect payment history, and collateral consisting of a ten-acre residential lot near Canyon Lake with an estimated market value of $120,000. This note has strong characteristics across the board: excellent seasoning, a good interest rate, a low LTV of fifty percent, and desirable collateral in one of Texas's most popular areas. A buyer would likely offer somewhere in the range of eighty-five to ninety percent of the remaining balance, or roughly $51,000 to $54,000.

This type of note is the gold standard in the Texas land note market. It has everything a buyer wants — proven payment history, attractive financial terms, and rock-solid collateral. If your note looks anything like this scenario, you can expect competitive offers from multiple buyers.

The Average Note on Solid Collateral

Now consider a note with a remaining balance of $35,000, an interest rate of seven percent, monthly payments of $350, 138 payments remaining, eighteen months of mostly on-time payments with one thirty-day late, and collateral consisting of a five-acre lot in a rural East Texas subdivision with an estimated market value of $50,000. This note has solid but not exceptional characteristics: decent seasoning with a minor blemish, a moderate interest rate, a reasonable LTV of seventy percent, and collateral that is marketable but not in a high-demand area. A buyer would likely offer in the range of seventy-five to eighty-five percent of the remaining balance, or roughly $26,000 to $30,000.

Notes like this one make up the bulk of the Texas land note market. They are not perfect, but they are solid investments for buyers who understand the market. If your note falls into this category, you can still expect a fair offer from an experienced buyer.

The Challenging Note That Can Still Be Sold

Finally, consider a note with a remaining balance of $25,000, an interest rate of five percent, monthly payments of $200, 180 payments remaining, only eight months of payment history with two late payments, and collateral consisting of a remote twenty-acre tract in a West Texas county with an estimated market value of $30,000. This note has several challenges: limited seasoning with payment issues, a low interest rate, a high LTV of eighty-three percent, a very long remaining term, and remote collateral with limited marketability. A buyer would likely offer in the range of sixty-five to seventy-five percent of the remaining balance, or roughly $16,000 to $19,000.

Even notes with significant challenges have value in the secondary market. A buyer who specializes in Texas land notes will know how to evaluate the risks and will make an offer that reflects the note's realistic value. The discount may be deeper than you would like, but the offer represents real cash today versus years of uncertain future payments.

How to Maximize What Your Land Note Is Worth

Let the Note Season Before Selling

If your note is relatively new and you are not in an urgent need for cash, one of the most effective things you can do to increase its value is simply to wait. Every month of on-time payments adds to the seasoning and strengthens the payment history, both of which directly improve the note's appeal to buyers. A note that might sell at a twenty-five percent discount with six months of history could sell at a twenty percent discount with eighteen months of history and at a fifteen percent discount with thirty-six months of history. The improvement is not guaranteed to be exactly linear, but the general trend is clear: more seasoning means less discount.

Of course, waiting has its own costs — you are still managing the note, collecting payments, and bearing the risk that the borrower might default. The decision of when to sell involves balancing the potential for a better price against the opportunity cost of waiting and the risk of holding. If you have other uses for the cash that would generate a strong return, selling sooner may make sense even at a somewhat deeper discount.

Organize Your Documentation Before Requesting Quotes

Having your documents organized and complete before you approach a buyer signals that you are a serious, professional seller, and it allows the buyer to evaluate your note quickly and accurately. When a buyer receives a well-organized package including the note, security instrument, payment history, and property information, they can generate a quote with confidence, which typically means a better offer. When a buyer receives incomplete information and has to ask multiple follow-up questions, the process is slower, the buyer is less confident in their evaluation, and the offer may be more conservative to account for the unknowns.

Sell Directly to an Experienced Texas Buyer

Working with a direct buyer who uses their own capital to purchase notes eliminates the middleman markup that brokers charge and ensures that every dollar of the purchase price goes to you. Additionally, direct buyers who specialize in Texas land notes — like Longhorn Note Buyers — have the market knowledge to value your note accurately and the closing infrastructure to complete the transaction efficiently. Longhorn has purchased over $46 million in Texas notes since 2007 with a 100% close rate on quoted deals, which means when they quote you a price, you can trust that the deal will close. That certainty has real value and is something you should weigh heavily when evaluating your options.

Ready to Sell Your Note?

If you are wondering how much your land note is worth in Texas and you are ready for a definitive answer, the fastest way to find out is to request a free, no-obligation quote from Longhorn Note Buyers. With over four decades of combined note-buying experience and a deep understanding of every type of Texas land collateral, Longhorn can evaluate your note quickly and provide a fair offer — typically within 24 hours. Whether your note is a gold-standard performer or one with some challenges, Longhorn will give you an honest assessment and a transparent offer.

Call Longhorn Note Buyers today at (210) 828-3573 or visit longhornnotebuyers.com to get started. There is no cost and no obligation — just a straightforward evaluation of what your Texas land note is worth in today's market. With an A+ Better Business Bureau rating and a reputation built on decades of honest dealing, Longhorn Note Buyers is the right partner to help you understand and realize the value of your note.

Frequently Asked Questions About Land Note Valuation in Texas

Is there an online calculator that can tell me exactly what my note is worth?

While there are online calculators that can estimate the present value of a payment stream based on a specified discount rate, these tools cannot account for the many qualitative factors that affect land note pricing in the real world — factors like payment history quality, collateral type and condition, location-specific market dynamics, and the overall risk profile of the note. An online calculator might give you a rough mathematical starting point, but the only way to get an accurate valuation is to have your note evaluated by an experienced buyer who can assess all of the relevant factors in context. A free quote from a reputable buyer will give you a far more reliable number than any online tool.

Why do different buyers offer different prices for the same note?

Different note buyers have different costs of capital, yield requirements, risk assessments, and portfolio strategies, all of which influence the price they are willing to pay. A buyer with a lower cost of capital can afford to pay more for your note because they need a smaller spread to earn their required return. A buyer with extensive experience in your specific type of collateral may feel more comfortable with the risk and offer a higher price than a buyer who is less familiar with that property type. Additionally, some buyers charge fees or commissions that effectively reduce your net proceeds, while others provide all-in pricing. Getting quotes from multiple reputable buyers is the best way to ensure you are receiving a competitive offer.

Can I get more money by selling my note to a broker instead of a direct buyer?

In general, selling directly to a buyer who uses their own capital produces better net proceeds for you than selling through a broker. When you work with a broker, the broker takes a commission — typically a percentage of the transaction — that comes directly out of your proceeds. By eliminating the broker and working directly with a buyer, you keep that commission in your pocket. The one scenario where a broker might add value is if you have an unusual note that is difficult to place and the broker has access to a wider network of potential buyers. For most Texas land notes, however, a direct buyer with experience in the market will provide both the best price and the smoothest process.

Does the type of land affect my note's value more than the note terms?

Both the collateral and the note terms are important, but for most transactions, the note terms — particularly payment history, interest rate, and LTV — have a somewhat larger impact on pricing than the specific type of land. This is because the note terms directly determine the buyer's return and risk profile, while the land serves as a secondary factor that the buyer hopes they will never need to rely on. That said, the land type and location can tip the balance in borderline cases and can make a meaningful difference at the margins. A note with moderate terms on exceptional collateral will receive a better offer than the same note on weak collateral, even if the note terms are identical.

How long is a quote typically valid for?

Most note buyers will honor their quoted price for a limited period, typically fifteen to thirty days from the date of the quote. After that period, the buyer may need to reevaluate the note because market conditions, interest rates, or other factors may have changed. If you receive a quote that you find attractive, it is generally wise to move forward within the quote's validity period to lock in that price. If you need more time to make a decision, most buyers are happy to discuss extensions or to re-evaluate the note when you are ready to proceed.