Sell Your Commercial Land Note in Texas: Options for Sellers

Commercial land notes represent a distinct segment of the Texas note market that operates by its own set of rules and valuation criteria. If you hold a promissory note secured by commercial land in Texas — whether it is a retail pad site along a busy highway, a tract zoned for industrial use near a distribution hub, or an office development parcel on the outskirts of a growing city — you have an asset that can be converted into immediate cash through the secondary note market. The decision to sell a commercial land note in Texas comes with its own set of considerations that differ meaningfully from selling a residential lot note or a rural acreage note, and understanding those differences is the key to getting the best possible price.

Texas has one of the most dynamic commercial real estate markets in the United States, driven by sustained population growth, a business-friendly regulatory environment, the absence of a state income tax, and a diversified economy anchored by energy, technology, healthcare, and logistics. That dynamism extends to the commercial land market, where seller-financed transactions have become an increasingly common way for landowners to sell parcels to small business owners, independent developers, and entrepreneurs who may not qualify for traditional bank financing. The promissory notes that result from these transactions have value in the secondary market, and if you are holding one, this guide will show you exactly how to unlock that value.

In the following sections, you will learn what makes commercial land notes unique from a buyer's perspective, how the pricing and discount structure works for commercial collateral, what factors most heavily influence the offer you receive, and how to navigate the sale process from start to finish. Whether you are looking to sell a single note or evaluate your options for the first time, this guide provides the comprehensive information you need to move forward with confidence.

What Distinguishes Commercial Land Notes From Other Land Notes

Zoning, Entitlements, and Their Impact on Collateral Value

The most fundamental difference between a commercial land note and a residential or agricultural land note is the role that zoning and entitlements play in determining collateral value. A commercial parcel's value is heavily tied to what can be built on it and what uses are permitted under local zoning ordinances. A ten-acre tract zoned for heavy commercial use along an interstate frontage road has a very different value proposition than a ten-acre tract zoned for single-family residential use in the same county, even if the raw land characteristics are identical. When a note buyer evaluates your commercial land note, the zoning designation and any entitlements that have been obtained — such as site plan approval, platting, utility commitments, or traffic impact studies — are central to their collateral analysis.

Entitlements are particularly important because they represent real investment that the property owner has made in preparing the land for its intended commercial use. A commercial tract that has been platted, has a completed environmental assessment, has secured utility commitments from local providers, and has an approved site plan is significantly more valuable than a raw tract with only a favorable zoning designation. If your borrower has obtained any of these entitlements since purchasing the property from you, those improvements benefit the collateral value and should be communicated to the note buyer during the quote process. Entitlements reduce the time and cost required for the next buyer to develop the property, which makes the collateral more liquid and supports a better offer on your note.

The Income Potential Factor

Commercial land is valued not just for what it is today but for what it can become. Unlike residential lots where the end use is relatively straightforward — someone builds a house and lives in it — commercial land supports a wide range of income-producing uses, from retail centers and restaurants to warehouses, office buildings, and mixed-use developments. Note buyers understand that the income potential of the commercial use influences the land's market value and, by extension, the collateral quality of the note.

If your commercial land note is secured by a parcel in an area with strong commercial demand — near a highway interchange, in a growing retail corridor, or adjacent to an existing commercial development — the income potential of the land is high, and the note buyer will view the collateral favorably. Conversely, if the parcel is in a location where commercial demand is weak or uncertain, the income potential is less clear, and the buyer will apply a more conservative valuation. The strength of the local commercial market is something that experienced note buyers evaluate carefully, and it can have a significant impact on the offer you receive.

Borrower Profile Differences in Commercial Transactions

The borrowers behind commercial land notes tend to have different profiles than those behind residential land notes. Commercial land buyers are often business entities — LLCs, corporations, or partnerships — rather than individuals. They purchase the land as part of a business plan, whether that plan involves building a facility for their own use, developing the property for lease or sale, or holding the land as an investment. This distinction matters to note buyers because business entities can have more complex financial situations than individual borrowers, and the success of the borrower's business plan can affect their ability and willingness to continue making note payments.

Note buyers will evaluate the borrower's entity structure, the guarantees behind the note (if any), and the borrower's track record of making payments. Personal guarantees from the principals of the borrowing entity are a significant positive factor because they give the note buyer recourse against individual assets in addition to the commercial land collateral. If your note includes a personal guarantee, make sure to highlight that when you request a quote, as it can meaningfully improve the offer you receive.

Pricing Factors Specific to Commercial Land Notes in Texas

Payment History and Note Seasoning

As with any land note, the borrower's payment history is the most critical factor in determining what a buyer will pay for your commercial land note in Texas. Consistent, on-time payments over an extended period demonstrate that the borrower is committed to the property and has the financial capacity to service the debt. For commercial notes, a strong payment history is especially important because commercial borrowers are statistically more likely to default during economic downturns than residential borrowers, and a long track record of payments provides reassurance that the borrower can weather financial fluctuations.

Most note buyers prefer a minimum of twelve months of seasoning for commercial land notes, and twenty-four months or more of consistent payments will place your note in the most favorable pricing tier. If your note is relatively new but the borrower is a well-established business with strong financials, the buyer may still offer competitive pricing, but the seasoning period remains a factor in their risk calculation. For a comprehensive overview of how payment history and other variables influence pricing, review this article on what determines note value in Texas.

Loan-to-Value and Commercial Land Valuation Challenges

The LTV ratio is critically important for commercial land notes, and establishing the current market value of commercial land can be more complex than valuing a residential lot or a rural tract. Commercial land values are influenced by zoning, entitlements, location, visibility, traffic counts, surrounding commercial development, and local market dynamics — all of which can change rapidly. A commercial parcel that was worth $20 per square foot two years ago might be worth $30 per square foot today if a major retailer has moved into the area, or it might be worth $15 per square foot if a planned highway interchange was cancelled.

Note buyers will use a combination of comparable sales data, local market research, and professional appraisal tools to establish a current value for the commercial collateral. In some cases, the buyer may order a formal appraisal if the remaining balance on the note is large enough to justify the cost. As the note seller, you can help the process by providing any information you have about recent sales of similar commercial land in the area, any appraisals that have been done on the property, and any developments in the surrounding area that might affect the land's value. The more data the buyer has to work with, the more confident and accurate their valuation will be, which generally leads to a better offer for you.

Interest Rate and Note Structure Considerations

Commercial land notes often have different structural characteristics than residential notes, and these differences affect pricing. Interest rates on seller-financed commercial land in Texas commonly range from seven to fourteen percent, reflecting the higher risk profile and shorter terms that are typical of commercial transactions. Higher rates are favorable for buyers because they generate more income, and notes with rates at the upper end of this range will generally receive better pricing than those with lower rates.

The term and amortization of the note are also important. Many commercial land notes have shorter terms — five to ten years — with balloon payments at the end, which is a common structure in commercial real estate financing. Balloon payments create refinancing risk that the buyer must account for, and the closer the balloon date is, the greater that risk. If your note has a balloon payment that is not due for several years, the impact on pricing is relatively modest. If the balloon is coming due within the next year or two, the buyer will price more conservatively because of the imminent risk that the borrower may not be able to refinance. Understanding how your note's structure compares to market norms will help you evaluate any offers you receive in proper context.

Location Within the Texas Commercial Market

Texas is a vast state with commercial land markets that vary dramatically by region. Commercial land in the DFW metroplex, Houston, Austin, and San Antonio benefits from massive population growth and diversified economic bases, which supports strong and rising land values. Commercial land in smaller cities like Lubbock, Midland-Odessa, Corpus Christi, or Waco can also be valuable, particularly in areas with strong local economic drivers, but the market depth and liquidity may be less than in the major metros.

Note buyers evaluate the location of your commercial collateral within the broader context of the Texas commercial market. A note secured by a retail pad site on a busy commercial corridor in a growing suburb of Austin is going to receive a very different offer than a note secured by a commercial tract on a quiet county road in a declining rural community. Location has always been the most important factor in real estate valuation, and that principle applies fully to commercial land notes. If your collateral is in a strong location, make sure the buyer understands the market dynamics — traffic counts, nearby developments, population growth projections — that support the land's value.

Navigating the Due Diligence Process for Commercial Land Notes

What Buyers Investigate During Due Diligence

The due diligence process for commercial land notes is generally more intensive than for residential or agricultural notes because of the additional complexities involved in commercial property evaluation. The buyer will verify the note terms and payment history, order a title search to confirm clear title, review all loan documents for legal compliance, and assess the current market value of the collateral. Beyond these standard steps, the buyer may also review zoning and land use regulations, check for environmental issues or contamination, verify compliance with any applicable regulations such as stormwater management or wetlands protection, and assess the commercial viability of the property's location.

Environmental due diligence is particularly important for commercial land notes because commercial properties can be subject to contamination from prior industrial or commercial uses, underground storage tanks, or adjacent properties with environmental issues. If a Phase I Environmental Site Assessment has been completed for the property, providing a copy to the buyer can expedite the due diligence process and reduce the buyer's uncertainty about environmental risk. If no environmental assessment has been done, the buyer may order one as part of their due diligence, which can add time and cost to the transaction.

Documents Specific to Commercial Note Sales

In addition to the standard note sale documents — the promissory note, deed of trust, payment history, and title insurance policy — commercial land note sales benefit from having several additional documents available. A copy of the current zoning designation, any site plans or development plans that have been approved, utility commitment letters, environmental assessments, traffic studies, and any permits or entitlements are all helpful. If the borrowing entity is an LLC or corporation, the buyer may also request the entity's organizing documents to verify that the note was properly executed by authorized representatives.

If a personal guarantee was provided as part of the note transaction, a copy of the guarantee agreement is essential because it gives the buyer additional security beyond the land collateral. Similarly, if there are any ancillary agreements related to the note — such as a subordination agreement, an estoppel certificate, or a servicing agreement — these should be included in the document package. For a general overview of the documentation requirements for land note sales, review this guide on documents needed to sell a land note in Texas.

Timeline Expectations for Commercial Note Transactions

Due to the additional complexity of commercial land notes, the due diligence and closing timeline tends to be slightly longer than for residential notes. While a straightforward residential lot note might close in two to three weeks, a commercial land note typically takes three to five weeks from accepted offer to funding. The additional time is primarily consumed by the more detailed title work, environmental review, and collateral valuation that commercial properties require.

If there are complications — such as title issues, environmental concerns, or questions about the zoning or legal status of the property — the timeline can extend further. However, a buyer who specializes in Texas land notes will have encountered these issues before and will know how to resolve them efficiently. The key to minimizing delays is to provide complete documentation upfront and to be responsive to any requests for additional information from the buyer's due diligence team. Proactive communication on your end can shave days or even weeks off the closing timeline.

Strategies for Maximizing the Value of Your Commercial Land Note

Highlight the Commercial Potential of Your Collateral

When you request a quote on your commercial land note, do not just provide the note terms and let the buyer figure out the rest. Take the time to explain the commercial potential of the property — what it is zoned for, what could be built on it, what commercial activity is happening in the surrounding area, and why the location is attractive for commercial development. If there are new developments, highway projects, or population growth trends that support increasing commercial land values in the area, share that information. Note buyers make their pricing decisions based on the information available to them, and the more compelling a picture you can paint of the collateral's commercial potential, the better your offer is likely to be.

Photographs or aerial imagery of the property and its surroundings can also be helpful, particularly if they show favorable characteristics like highway visibility, proximity to other commercial developments, or physical improvements that the borrower has made to the land. A buyer who can visualize the commercial opportunity is more likely to offer aggressive pricing than a buyer who is working solely from a legal description and a tax record.

Work With a Buyer Who Understands Commercial Collateral

Commercial land notes require a buyer who has specific experience with commercial property evaluation and who understands the nuances of zoning, entitlements, and commercial market dynamics. A buyer who primarily handles residential notes may not have the expertise to properly value your commercial collateral, which can result in a lower offer or a deal that falls apart during due diligence. Longhorn Note Buyers has been purchasing Texas land notes since 2007 and has extensive experience with commercial land notes across the state. With over $46 million in Texas notes purchased and a 100% close rate on quoted deals, Longhorn understands how to evaluate commercial collateral and will price your note fairly based on a thorough analysis of all relevant factors.

Consider Your Full Range of Options

Before committing to a full sale of your commercial land note, consider whether other options might better serve your financial goals. A partial sale, where you sell a specified number of payments while retaining the remaining payment stream, can be an effective way to raise cash without giving up the entire note. This option is particularly worth considering if you believe the commercial land value will appreciate significantly over the coming years, as you would retain a residual interest in a note backed by increasingly valuable collateral. You can learn more about how partial sales work and when they make sense by reading about full versus partial land note sales in Texas.

Another option to consider is selling your note at a time when the commercial market in your area is particularly strong. Commercial real estate markets in Texas tend to run in cycles, and selling your note when the underlying collateral is appreciating can result in a lower LTV and a better offer. While timing the market perfectly is never easy, being aware of local market trends can help you choose an advantageous moment to sell.

Ready to Sell Your Note?

If you are holding a commercial land note in Texas and you are ready to convert your future payments into a lump sum of cash, Longhorn Note Buyers is ready to help. With decades of experience in the Texas land market and a proven track record of closing deals efficiently and fairly, Longhorn can evaluate your commercial land note and provide a competitive offer — typically within 24 hours. Whether your note is secured by a retail pad site, an industrial tract, a commercial development parcel, or any other type of commercial land in Texas, Longhorn has the expertise and capital to get your deal done.

Contact Longhorn Note Buyers today at (210) 828-3573 or visit longhornnotebuyers.com to request your free, no-obligation quote. There is no cost to find out what your commercial land note is worth, and Longhorn's team is happy to answer any questions you have about the process. With an A+ Better Business Bureau rating and a commitment to closing 100% of the deals they quote, Longhorn Note Buyers is the trusted choice for Texas commercial land note sellers.

Frequently Asked Questions About Selling Commercial Land Notes in Texas

Are commercial land notes harder to sell than residential notes?

Commercial land notes are not necessarily harder to sell, but they do involve more complex due diligence due to the additional factors that affect commercial property valuation, such as zoning, entitlements, environmental considerations, and market dynamics. Working with a buyer who has specific experience with commercial land notes in Texas will ensure that the evaluation is thorough and accurate, and that the process moves as smoothly as possible. The key is finding a buyer who understands commercial collateral and has the capital to close the deal without relying on third-party funding.

Does the zoning of the land significantly affect the note's value?

Yes, zoning is one of the most important factors in determining the value of commercial land, and by extension, the value of a note secured by that land. Property zoned for high-demand uses — such as retail, industrial, or mixed-use — in growing markets will support better note pricing than property zoned for less intensive uses or in stagnant markets. If the property has entitlements beyond just a favorable zoning designation, such as an approved site plan or utility commitments, those entitlements add further value to the collateral and can improve your offer.

What if my borrower is an LLC — does that affect the note sale?

It is very common for commercial land to be purchased by LLCs, and this structure does not prevent you from selling the note. However, the buyer will want to verify that the LLC properly executed the note and deed of trust, that the LLC is in good standing with the Texas Secretary of State, and that the persons who signed on behalf of the LLC were authorized to do so. If the note includes a personal guarantee from the LLC's principals, that is a significant positive factor that reduces the buyer's risk and can improve pricing. Providing the LLC's organizing documents and the personal guarantee as part of your document package will streamline the due diligence process.

How long does it take to sell a commercial land note in Texas?

The typical timeline for selling a commercial land note in Texas is three to five weeks from accepted offer to funding. The initial quote can usually be provided within 24 hours, and the remaining time is consumed by due diligence, title work, and closing document preparation. More complex deals with environmental considerations, title issues, or large balances may take longer, while straightforward transactions with clean title and complete documentation can sometimes close faster. Throughout the process, a reputable buyer will keep you informed of progress and any issues that arise.

Can I sell a commercial land note if the property is not yet developed?

Absolutely. Many commercial land notes in Texas are secured by undeveloped parcels that the borrower purchased with the intention of building on in the future. The note buyer will evaluate the collateral based on the current value of the undeveloped land, taking into account its zoning, location, access, utilities, and any entitlements that have been obtained. Undeveloped commercial land is a perfectly acceptable form of collateral, and experienced note buyers purchase notes on undeveloped commercial parcels regularly. The most important factors remain the borrower's payment history, the note's financial terms, and the quality and location of the land itself.