Sell Your Land Note vs Sell the Land in Texas: Which Is Better?

If you own both a promissory note secured by Texas land and are wondering about your best exit strategy, you may be weighing a question that many Texas property owners face: should I sell my land note or sell the actual land in Texas? These are two fundamentally different transactions with different processes, timelines, costs, tax implications, and net outcomes. The right answer depends on your specific circumstances — your financial needs, your timeline, the property's characteristics, the borrower's status, and your tolerance for complexity. This comprehensive comparison will lay out both options side by side so you can evaluate which path makes the most sense for your situation.

It is important to clarify the starting point for this comparison. If you hold a promissory note, you are collecting payments from a borrower who purchased your land through owner financing. You do not currently own the land (assuming the deed has been transferred through a deed of trust arrangement) — you own the right to receive the remaining payments under the note, secured by a lien on the property. Selling the note means selling that right to another investor. Selling the land, on the other hand, would first require you to reacquire the property — either by having the borrower voluntarily convey it back (perhaps through a deed in lieu of foreclosure), by foreclosing if the borrower has defaulted, or by waiting for the note to be paid off and then selling a different property. In some cases, note holders also own adjacent or similar land that they are considering selling instead of or alongside the note. Whatever your situation, understanding the sell your land note vs sell the land comparison in Texas helps you see the full landscape of your options.

This guide assumes the most common scenario: you hold an active note with a borrower making payments, and you are comparing the option of selling that note to an investor against the hypothetical of having instead sold the raw land directly. We will also address the situation where the borrower has defaulted and you are choosing between completing the foreclosure and selling the property or selling the defaulted note. Both comparisons offer valuable insights for Texas landowners and note holders.

Selling Your Texas Land Note: How It Works

The Note Sale Process

Selling a Texas land note is a relatively streamlined process compared to selling real property. You contact a note buyer — ideally one who specializes in Texas land notes — and provide them with basic information about your note, including the remaining balance, interest rate, payment history, property details, and documentation. The buyer evaluates the note and provides a purchase price, typically within 24 hours for an experienced buyer like Longhorn Note Buyers. If you accept the offer, the closing process involves endorsing the note to the buyer, executing an assignment of the deed of trust, and receiving your payment — usually by wire transfer. The entire process, from initial contact to cash in hand, can be completed in two to four weeks for a straightforward note.

The simplicity of the note sale process is one of its primary advantages. There is no need for staging, showings, open houses, or buyer negotiations. There is no real estate agent commission (typically 5 to 6 percent of the sale price). There is no waiting for a buyer to secure financing — the note buyer is paying cash. There is no title insurance policy to purchase, no survey to commission, and no closing costs in the traditional real estate sense. The transaction is essentially a financial assignment — you are transferring a financial instrument from yourself to the buyer, and the property itself does not change hands.

What You Receive When Selling the Note

When you sell your note, you receive a lump sum that represents the present value of the remaining payment stream, discounted to reflect the time value of money, the buyer's required yield, and the risk factors associated with the note. As discussed in our article on discounts when selling a land note in Texas, this discount typically ranges from 10 to 40 percent of the remaining balance for performing notes, depending on the note's characteristics. The net amount you receive is the full purchase price with no deductions for commissions, staging, repairs, or other selling costs — what you are quoted is what you get.

Selling the Land in Texas: How It Works

The Land Sale Process

Selling raw land or rural property in Texas is a different experience entirely. The process begins with preparing the property for sale, which may involve clearing debris, establishing access, getting a survey, and gathering documentation about the property's characteristics (water availability, soil quality, mineral rights, easements, zoning, and so on). You then market the property — either through a real estate agent who specializes in land sales or through self-listing on platforms designed for land. Finding a buyer for rural Texas land can take weeks, months, or even years depending on the property's location, size, price, and market conditions. Land does not sell like houses — there are fewer buyers, the evaluation process is more complex, and financing is harder to obtain.

Once a buyer is found, the transaction involves negotiation, due diligence, title work, survey verification, and closing — a process that adds additional weeks to the timeline. If the buyer is using conventional financing (which is less common for raw land), the lender's requirements can add further delays. If the buyer wants owner financing, you are back to creating a new note — which may or may not be what you want. The total timeline from deciding to sell to receiving cash can easily be three to twelve months for land, compared to two to four weeks for a note sale.

Costs of Selling Land in Texas

Selling land comes with significant costs that directly reduce your net proceeds. Real estate agent commissions are typically 5 to 6 percent of the sale price — on a 100,000-dollar property, that is 5,000 to 6,000 dollars. Title insurance, survey costs, deed preparation, recording fees, and other closing costs can add another 1 to 3 percent. If the property needs any work to be marketable — clearing, fencing, road maintenance, or environmental remediation — those costs come out of your pocket before the sale. Property taxes continue to accrue until the sale closes, and if you have been carrying the property for an extended period, the cumulative tax burden can be substantial. All told, the selling costs for Texas land can consume 8 to 12 percent or more of the gross sale price, significantly reducing your net proceeds.

Direct Comparison: Note Sale vs Land Sale in Texas

Timeline

The timeline advantage clearly favors selling the note. A note sale can be completed in two to four weeks, sometimes faster. A land sale in rural Texas commonly takes three to twelve months, and properties in less desirable locations can sit on the market much longer. If you need cash quickly — for a medical expense, a business opportunity, a family obligation, or any other time-sensitive need — selling the note gets money in your hands dramatically faster than selling land. This speed advantage alone makes note sales the preferred option for many Texas note holders who need liquidity.

Costs and Net Proceeds

Selling a note involves no agent commissions, no staging costs, no survey costs, and no traditional closing costs. The discount is the only "cost" — and it is built into the purchase price rather than deducted from it. Selling land involves commissions of 5 to 6 percent, closing costs of 1 to 3 percent, and potentially additional costs for property preparation. When you compare the net proceeds — what actually ends up in your bank account — the note sale discount and the land sale costs can produce surprisingly similar outcomes, particularly for properties in the 50,000 to 200,000 dollar range where agent commissions and closing costs represent significant amounts.

Complexity and Effort

Selling a note requires minimal effort from the note holder — provide documents, review the offer, sign the assignment, receive payment. Selling land requires substantial effort: property preparation, marketing, showing the property (which may be hours from your home), negotiating with buyers, managing inspections and due diligence, coordinating with title companies, and dealing with the inevitable complications that arise in real estate transactions. For note holders who value their time or who live far from the property, the simplicity of a note sale is a major advantage.

Tax Implications

The tax implications of selling a note versus selling land can differ significantly depending on your specific situation. If you originally sold the land on the installment method, selling the note triggers recognition of the remaining deferred gain in the year of the note sale. Selling the land (if you reacquire it through foreclosure first) involves a different tax analysis — you may have a new cost basis in the property equal to the amount you bid at the foreclosure sale, and the gain on the subsequent land sale would be calculated based on that new basis. These are complex tax questions that depend on your individual circumstances, and consulting with a qualified tax advisor is essential before making either decision. For foundational information, our guide on tax implications of selling a land note in Texas covers the key concepts.

Scenarios Where Selling the Note Is Clearly Better

When the Borrower Is Current and You Need Cash Now

If your borrower is making regular payments and you need a lump sum of cash, selling the note is almost always the better option. You receive cash in weeks rather than months, you avoid the costs and hassle of a land sale, and you do not need to disrupt the borrower's occupancy or use of the property. The borrower continues making payments to the new note holder, and you move on with your cash. There is no scenario in which selling land is faster or simpler when the borrower is current and you need money quickly.

When the Property Is Remote or Difficult to Sell

Rural Texas land can be extremely difficult to sell, particularly if the property is in a remote location, lacks road access, has no water or utilities, or is in an area with limited demand. A note secured by such a property, however, can be sold to a note buyer who evaluates it based on the income stream and the collateral — they do not need to find a retail buyer for the land. If you have tried to sell rural land and found the process frustrating and slow, selling the note instead may be a revelation. Longhorn Note Buyers specializes in Texas land notes and understands the rural market, making them well-positioned to evaluate and purchase notes on properties that might be difficult to sell on the open market.

When You Want to Avoid the Headaches of a Land Sale

Land sales involve real estate agents, property showings, buyer negotiations, title issues, survey disputes, financing contingencies, and closing delays. Each of these elements introduces complexity, cost, and risk of the deal falling through. If you have been through a land sale before and found the experience frustrating, selling the note instead offers a dramatically simpler alternative. The transaction is between you and the note buyer, the terms are straightforward, and the process is predictable. For note holders who value simplicity and certainty, this advantage alone can be decisive.

Scenarios Where Selling the Land Might Make Sense

When the Property Has Appreciated Significantly

If the property securing your note has appreciated dramatically since the original sale — perhaps it is now in the path of development, adjacent to a new highway, or in an area experiencing rapid growth — selling the land directly (after reacquiring it) could yield a higher net return than selling the note. This is because the note balance is fixed based on the original sale price, while the property's current market value may far exceed that amount. However, reacquiring the property requires either a borrower default and foreclosure or a negotiated buyback, both of which add time, cost, and complexity. This scenario is relatively uncommon but worth considering if you have strong evidence of significant appreciation.

When the Borrower Has Defaulted and the Property Is Highly Marketable

If your borrower has defaulted and you are going to foreclose anyway, selling the property after foreclosure can sometimes produce a higher total return than selling the defaulted note. This is because you avoid the deep discount that non-performing notes command and instead sell the property at its market value (minus selling costs). The trade-off is time and cost — you need to complete the foreclosure (60 to 90 days), potentially clean up the property, and then market and sell it (months to years). If the property is in a desirable location with strong demand, this can be a viable strategy. If the property is rural, remote, or difficult to sell, the time and cost of this approach often erode any advantage over selling the note at a discount.

The Hybrid Approach: Selling the Note to Avoid the Land Sale

Why Many Note Holders Choose This Path

For many Texas note holders, the comparison between selling the note and selling the land leads to an obvious conclusion: selling the note is simpler, faster, less expensive, and produces competitive net proceeds without the hassle of a traditional land sale. The note holder avoids real estate commissions, avoids the uncertainty of the land market, avoids the time commitment of marketing and showing property, and receives a certain sum of cash within weeks. This is why a large and growing number of Texas land note holders are choosing to sell their notes to experienced buyers like Longhorn Note Buyers rather than going through the process of selling land directly.

The hybrid approach also works for note holders who have multiple notes or who own both notes and land. By selling the notes and keeping the land (or vice versa), you can optimize your portfolio for your specific goals — liquidity from the note sales and long-term appreciation from the land holdings. An experienced note buyer can help you evaluate which notes to sell and which to keep based on their individual characteristics and your overall financial strategy.

Ready to Sell Your Note?

If you are comparing the option of selling your Texas land note versus dealing with a land sale, Longhorn Note Buyers can help you make an informed decision. With over $46 million in Texas notes purchased since 2007, a 100 percent close rate on every deal quoted, and a BBB A+ rating, Longhorn Note Buyers provides the speed, expertise, and fair pricing that Texas note holders deserve. Founded by Nick McFadin — buying notes since 1983 — and partnered with Sandy McFadin since 2013, Longhorn is based in San Antonio and works exclusively with Texas notes. Call (210) 828-3573 or visit longhornnotebuyers.com to get a free, no-obligation quote within 24 hours. Discover how selling your note can put cash in your hands faster and with less hassle than any land sale.

Frequently Asked Questions

Can I sell my note if I no longer own the land?

If you sold the land through owner financing and transferred the deed to the buyer (as is the case with a deed of trust arrangement), you do not own the land — you own the note and the lien. You can absolutely sell the note without any involvement of the land sale process. This is the normal situation for most note sales: you are selling your right to receive the remaining payments, not the property itself. The buyer of the note steps into your position as the lienholder and receives the borrower's payments going forward.

Which option gives me more money — selling the note or selling the land?

The answer depends on several factors including the property's current market value, the remaining note balance, the note's interest rate, the costs of selling land versus the note discount, and the time value of money. In many cases, when you account for agent commissions, closing costs, property preparation costs, and the time value of the money tied up during a lengthy land sale process, the net proceeds from a note sale are competitive with or even exceed the net proceeds from a land sale. The best approach is to get a quote on your note and an estimate of the land's market value, then compare the net proceeds side by side.

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

A land note can typically be sold in two to four weeks from initial contact to closing. Selling land in rural Texas commonly takes three to twelve months, and some properties take significantly longer. The timeline difference is one of the most significant advantages of selling the note — if you need cash quickly, the note sale is dramatically faster. Even if speed is not your primary concern, the shorter timeline means less uncertainty, less carrying cost, and less opportunity for market conditions to change.

Do I need a real estate agent to sell my note?

No, you do not need a real estate agent to sell your note. Note sales are handled directly between you and the note buyer, without agent involvement. This means there are no agent commissions to pay, which can save you 5 to 6 percent of the transaction value. You can contact a note buyer directly, provide your documentation, receive a quote, and close the transaction without any intermediary. If you want guidance on which note buyer to work with, our guide on direct buyers vs brokers can help you understand your options.

What if I want to sell the land but the borrower is still making payments?

If the borrower is current on their payments, you cannot sell the land because you do not own it — the borrower holds title (in a deed of trust arrangement). Your asset is the note and lien, not the land. Selling the note is your exit strategy in this situation. If you want to reacquire the land, you would need the borrower to either pay off the note, voluntarily convey the property back (deed in lieu), or default so that you can foreclose. None of these are guaranteed, and pursuing them can be time-consuming and costly. For most note holders who want to convert their position to cash, selling the note is the direct and practical solution.