Sell a Land Note With High LTV in Texas — Tips for Better Pricing

The loan-to-value ratio is one of the most critical metrics that note buyers evaluate when pricing a Texas land note, and if your note has a high LTV — generally defined as above seventy-five to eighty percent — you are dealing with one of the more challenging pricing factors in the secondary market. A high LTV means the remaining balance on your note is close to or even exceeds the current market value of the property, which leaves the buyer with little or no equity cushion to protect their investment in a default scenario. This risk dynamic drives deeper discounts, but it does not make your note unsellable. Understanding how to sell a land note with high LTV in Texas effectively requires knowing what buyers focus on, what strategies can improve your position, and how to set realistic pricing expectations.

High LTV notes are more common in the Texas land market than many sellers realize. They typically result from one of several circumstances: the original sale involved a small or zero down payment, the property has declined in value since the note was created, the note has an interest-only or negatively amortizing structure that has not reduced the principal, or the original purchase price reflected a premium above the property's current market value. Whatever the cause, the effect is the same — the buyer's margin of safety is thin, and they will require compensation for that elevated risk in the form of a larger discount.

This guide will explain how LTV is calculated and why it matters so much to buyers, what discount ranges to expect at different LTV levels, how to verify and potentially improve your LTV before selling, and what other factors can offset a high LTV in the buyer's analysis. Whether your LTV is eighty percent or one hundred percent, the strategies and information here will help you navigate the selling process and maximize the cash you receive.

Understanding LTV and Why It Dominates Buyer Pricing

How LTV Is Calculated for Land Notes

The loan-to-value ratio is calculated by dividing the current remaining balance of the note by the current market value of the property. If your note has a remaining balance of $45,000 and the property is currently worth $60,000, the LTV is seventy-five percent. If the remaining balance is $55,000 and the property is worth $60,000, the LTV is ninety-two percent. The calculation is straightforward, but the inputs — particularly the property's current market value — can be subject to interpretation and are often the most debated element in a note pricing negotiation.

Note buyers determine the current market value through a combination of comparable sales analysis, county tax appraisal data, and their own market expertise. In some cases, the buyer may order a formal appraisal or a broker price opinion, particularly for higher-balance notes where the accuracy of the valuation has a large impact on the purchase price. As the note seller, you may have a different view of the property's value than the buyer does, and understanding how the buyer arrives at their valuation can help you evaluate whether their LTV calculation — and therefore their pricing — is fair.

Why LTV Is the Buyer's Primary Risk Measure

LTV is the buyer's most direct measure of downside protection. If the borrower defaults, the buyer's recovery depends on foreclosing on the property and selling it. The sale price they achieve, minus the costs of foreclosure and resale, determines whether the buyer recovers their investment. At a fifty percent LTV, the buyer has a large cushion — the property would need to lose half its value before the buyer faces a loss. At a ninety percent LTV, the cushion is razor-thin — even modest foreclosure costs or a small dip in property values could push the buyer into a loss position.

This risk dynamic is why LTV has such an outsized impact on pricing. A buyer can tolerate a slightly weaker payment history or a somewhat lower interest rate if the LTV provides a strong safety net. But when the LTV is high, the safety net is inadequate, and the buyer must compensate by requiring a larger discount to build their return up to a level that justifies the elevated risk. In effect, a high LTV forces the buyer to earn a higher yield on their investment to offset the greater potential for loss, and that higher yield comes from paying you less for the note. For a comprehensive view of all pricing factors, review this resource on what determines note value in Texas.

LTV Breakpoints and Their Impact on Pricing

While LTV affects pricing on a continuum, there are practical breakpoints where the buyer's risk assessment shifts meaningfully. Notes with LTVs below sixty-five percent are considered low-risk from a collateral perspective and receive the most favorable pricing adjustments. LTVs between sixty-five and seventy-five percent are considered moderate and attract standard market pricing. LTVs between seventy-five and eighty-five percent are where buyers start to apply meaningful collateral risk premiums. And LTVs above eighty-five percent represent the highest risk tier, where the discount can be quite substantial because the buyer has very little room for error.

To put approximate numbers on it, a note with an eighty percent LTV might receive a discount that is five to eight percentage points deeper than the same note at a sixty percent LTV. A note at ninety percent LTV might see an additional three to five points beyond the eighty percent level. And a note at or above 100 percent LTV — where the balance exceeds the property value — faces the steepest pricing challenge because the buyer starts in a loss position on the collateral and must rely entirely on borrower performance for their return.

Verifying Your LTV Before Approaching Buyers

Establishing the Current Remaining Balance

The numerator of the LTV calculation — the remaining balance — should be straightforward to determine. If your note is being serviced by a third-party company, they can provide a current account statement showing the exact balance. If you are collecting payments yourself, you will need to calculate the remaining balance based on the original note terms and the payments received to date, accounting for the allocation between principal and interest. If you have been tracking payments accurately, this calculation is simple. If your records are less precise, now is the time to reconcile them so you have an accurate number to present to the buyer.

Be sure to account for any arrearages, late fees, or other charges that may have increased the amount owed. If the borrower has missed payments that have been capitalized into the balance, or if there are unpaid late fees that are accruing, the effective balance may be higher than the originally scheduled balance. An accurate remaining balance is essential for a credible LTV calculation and for a productive conversation with the buyer.

Estimating the Current Property Value

The denominator of the LTV calculation — the property's current market value — requires more judgment. Start with the county tax appraisal district's assessed value, which is publicly available for every property in Texas. Keep in mind that tax assessed values are often conservative and may not reflect the full market value, particularly in areas where land prices have appreciated rapidly. However, the assessed value provides a useful floor estimate.

Next, research recent comparable sales in the area. Look for sales of similar properties — same county, similar size, similar type, similar features — within the past twelve to twenty-four months. County property records, real estate listing sites, and the Texas Comptroller's property tax database can all provide comparable sales data. If comparable sales suggest that properties like yours are selling for more than the tax assessed value, you may be able to make a case for a higher market value and therefore a lower LTV. Conversely, if comparable sales are at or below the assessed value, the buyer's valuation may align with or be below the tax assessed number.

The Value of a Recent Appraisal or BPO

If the stakes are high — meaning your note has a large remaining balance and the LTV is a borderline case that could swing the pricing significantly — investing in a recent appraisal or broker price opinion before approaching buyers can be a smart move. A professional valuation from a licensed Texas appraiser or a knowledgeable local real estate broker provides a credible, defensible estimate of the property's current market value that the buyer can rely on with confidence.

The cost of an appraisal for a land parcel in Texas typically ranges from $300 to $800 depending on the property's size, complexity, and location. A broker price opinion is usually less expensive, often $100 to $300. If the professional valuation supports a higher property value than the buyer might otherwise assume — and therefore a lower LTV — the pricing improvement on the note sale can far exceed the cost of the valuation. This is particularly true for properties in rapidly appreciating markets where the current value may be significantly higher than what public records or casual estimates would suggest.

Strategies for Improving Your High-LTV Note's Pricing

Wait for the LTV to Improve Naturally

If you are not in a rush to sell, time is your most powerful tool for improving a high LTV. Every monthly payment your borrower makes reduces the principal balance, and if the property is in an appreciating market, the value is increasing simultaneously. This dual effect can reduce the LTV by several percentage points per year without any action on your part other than collecting payments and waiting. A note that has an eighty-five percent LTV today might have a seventy-five percent LTV in eighteen months — a meaningful improvement that could translate into five or more percentage points of better pricing.

Calculate the rate at which your LTV is improving based on the principal amortization schedule and any estimated appreciation, and project when the LTV will cross key thresholds. If you are within six to twelve months of dropping below eighty percent or seventy-five percent, the pricing improvement from waiting is likely to exceed any benefit of selling sooner. If the LTV is improving slowly because the note has a low interest rate or an interest-only structure, the wait may not be productive, and other strategies should be considered.

Leverage Strong Seasoning and Payment History

While a high LTV is a negative factor, a strong payment history is a powerful countervailing positive. A borrower who has made forty-eight consecutive on-time payments has demonstrated exceptional commitment and reliability, and that track record carries significant weight in the buyer's analysis even when the LTV is high. The buyer can see that the borrower has had four years of opportunities to walk away and has chosen to stay every single month — that is powerful evidence that the borrower views the property as worth more than the remaining balance, regardless of what the market says.

When presenting your high-LTV note to a buyer, lead with the payment history. Make it the centerpiece of your pitch and let the buyer see that the borrower's performance speaks louder than the LTV ratio. A note with a high LTV and an exceptional payment history is a fundamentally different risk proposition than a note with the same LTV and a short or troubled payment record, and a good buyer will recognize and price that difference accordingly.

Provide Strong Collateral Documentation

For high-LTV notes, the buyer's collateral evaluation is especially important because the margin of safety is thin. Any information you can provide that supports a higher property value helps your cause. Comparable sales data, recent tax assessments, photographs of the property showing improvements or favorable characteristics, information about local development or infrastructure projects, and any professional valuations all contribute to the buyer's confidence in the collateral value and can support a lower LTV calculation than the buyer might arrive at independently.

If the borrower has made improvements to the property since the note was created — cleared the land, installed a well or septic system, built fencing, created road access, or made any other physical improvements — those improvements add value that may not be reflected in public records. Document the improvements as thoroughly as possible and share that documentation with the buyer. Improvements that the buyer is unaware of represent hidden collateral value that, if surfaced, can improve the LTV calculation and support better pricing.

Consider a Partial Sale to Reduce Buyer Exposure

A partial note sale can be an effective strategy for high-LTV notes because it limits the buyer's financial exposure to a shorter period, reducing their risk in two ways. First, the buyer's total capital at risk is smaller because they are purchasing fewer payments. Second, the LTV continues to improve during the partial sale period as the borrower makes ongoing principal payments, which means the residual note that reverts to you will have a better LTV than it does today. This reduced risk profile typically results in a smaller discount on the purchased payments. For a detailed comparison of partial and full sale options, read about full versus partial land note sales in Texas.

Work With a Buyer Who Evaluates the Complete Picture

A buyer who fixates exclusively on the LTV ratio without considering the full context of the note is likely to offer you a deeply discounted price that does not reflect the note's true value. An experienced buyer like Longhorn Note Buyers evaluates the complete picture — LTV, seasoning, payment history, interest rate, collateral characteristics, borrower profile, and market dynamics — and prices the note based on the holistic risk assessment, not just a single metric. Longhorn has purchased over $46 million in Texas land notes since 2007, including many with high LTVs, and understands how to weigh the LTV factor appropriately against the note's strengths.

Setting Realistic Expectations

What to Expect at Different LTV Levels

Setting realistic expectations is essential to a productive note sale experience. If your LTV is between seventy-five and eighty-five percent, expect a discount that is five to ten percentage points deeper than what a comparable note with a fifty to sixty percent LTV would receive. If your LTV is between eighty-five and ninety-five percent, expect a discount that is ten to twenty points deeper. If your LTV is at or above 100 percent, the pricing will be driven primarily by the borrower's performance history and the buyer's assessment of recovery value, and the discount could be thirty percent or more.

These ranges are approximate and can vary significantly based on the other characteristics of the note. A high-LTV note with excellent seasoning, a high interest rate, and desirable collateral will fare better than a high-LTV note with limited history, a low rate, and remote collateral. Getting a quote from an experienced buyer is the only way to know exactly where your specific note falls.

When the Math May Not Work

In some cases, the combination of a very high LTV and other challenging factors may produce an offer that does not make financial sense for you. If the buyer's offer is only thirty or forty percent of the remaining balance, the cash you receive may not justify the loss of the payment stream. In these situations, holding the note and allowing time to improve the LTV through continued payments and potential appreciation may be the better financial choice. There is no rule that says you must sell — if the offer does not work for you, holding is always an option, and a reputable buyer will not pressure you into a deal that does not serve your interests.

Ready to Sell Your Note?

If you hold a high-LTV land note in Texas and you want to find out what it is worth in today's market, Longhorn Note Buyers can provide a free, no-obligation evaluation. Longhorn's team understands that LTV is just one factor among many and will evaluate your note based on the complete picture, giving you a fair and transparent offer that reflects the note's true value. With over $46 million in Texas notes purchased since 2007 and a 100% close rate on quoted deals, Longhorn has the experience and capital to make competitive offers on high-LTV notes and the integrity to treat you fairly regardless of the LTV ratio.

Call Longhorn Note Buyers today at (210) 828-3573 or visit longhornnotebuyers.com to request your quote. Whether your LTV is seventy-eight percent or ninety-eight percent, Longhorn will give you an honest assessment and a concrete number to work with. With an A+ Better Business Bureau rating and a reputation for fair dealing, Longhorn Note Buyers is the right partner for selling your high-LTV Texas land note.

Frequently Asked Questions About Selling High-LTV Land Notes in Texas

What LTV is considered "high" in the Texas land note market?

In the Texas land note market, an LTV above seventy-five percent is generally considered elevated, and an LTV above eighty-five percent is considered high. Notes with LTVs below sixty-five percent receive the most favorable collateral-related pricing, while notes above eighty-five percent face the steepest discounts. The exact thresholds vary by buyer, but these ranges provide a useful general framework for understanding where your note falls on the risk spectrum.

Can a strong payment history compensate for a high LTV?

Yes, to a meaningful degree. A long track record of perfect payments demonstrates that the borrower is committed to the property and capable of making the payments, which reduces the buyer's concern about default risk even when the LTV is high. A note with a ninety percent LTV but thirty-six months of flawless payments will receive significantly better pricing than a note with the same LTV but only six months of history. Strong seasoning does not completely eliminate the LTV discount, but it can substantially reduce it.

Should I pay for an appraisal before selling?

If your note has a large remaining balance and the LTV is a borderline case — near a breakpoint like seventy-five or eighty-five percent — a professional appraisal can be a smart investment. If the appraisal supports a higher property value than the buyer would otherwise assume, the resulting lower LTV can improve your pricing by more than the cost of the appraisal. For smaller notes or notes where the LTV is clearly high regardless of the valuation, the appraisal cost may not produce enough pricing improvement to justify the expense.

What if my property has declined in value since I created the note?

If the property has lost value, your LTV may be higher than it was at origination even after years of borrower payments. This is a particularly challenging situation because the borrower may owe more than the property is worth, creating a negative equity position. Notes with negative equity are the hardest to sell because the buyer starts in a loss position on the collateral. However, if the borrower is still making payments consistently, the note has value based on the payment stream itself, and buyers who focus on borrower performance rather than just collateral can still make offers that, while deeply discounted, put real cash in your hand.

Is it better to wait for the LTV to improve or sell now?

This depends on the rate of LTV improvement and your personal circumstances. If the LTV is improving rapidly due to strong principal amortization and property appreciation, waiting six to twelve months can produce a meaningful pricing improvement. If the LTV is improving slowly or the property value is stagnant, waiting may not help much, and selling now avoids the risk that conditions could deteriorate further. As a general rule, if the LTV will cross a key threshold within the next six months, waiting is worth the patience. If the LTV improvement is marginal, selling now and deploying the cash productively may be the better choice.