Commercial Notes

What is a Commercial Note?

In the note business, we consider a commercial note to be one in which a commercial property was sold using owner financing.  If you sold a business without the real estate (business assets only), we would call that a business note and ask you to go here. While Seascape Capital has always purchased notes on houses, mobile homes, land, and similar properties, an increasing share of our calls over the past several years have been for commercial notes like the following:

  • Office building notes
  • Notes on apartment buildings with more than 4 units
  • Church notes
  • Auto repair shop notes
  • Gas station notes
  • Retail notes
  • Mixed-use property notes (for example, where a retail shop is downstairs and an apartment upstairs)
  • Motel notes
  • Industrial notes

Regardless of the type, commercial real estate notes are treated differently from other types in that:

  1.  We want to know about the business that resides there
  2. The appraiser often values the property differently
  3. The payer on the note is more frequently an LLC or corporation
  4. Usage may vary, zoning plays a bigger part, and potential environmental concerns need to be addressed

Why Sell a Commercial Note?

You were smart to sell your property using owner financing but may need money now for items like:
  • Buying other properties
  • Investment opportunities
  • Reducing debts
  • Settling an estate
You may choose to sell the full note or just part of the note – called a partial. With a partial, you only sell some of the payments instead of all of them. For example, assume that you have a 15-year note with a balance of $200,000. If you only need $70,000, you can choose to sell the next five years of payments and keep the rest of the note.

Steps in Selling a Note

  1. Contact one or more note buyers that are experienced, competent, and honest.  You can dig into this by checking them out on the Better Business Bureau site, looking for other online reviews like on Google, and talking with them.
  2. Submit an on-line worksheet or call.  Plan to spend about ten minutes on the phone, as the note buyer will have questions about the financials and the property.
  3. Once you and they have agreed on a price for the note, the due diligence phase begins.  This starts with the commercial buyer checking the payer’s credit and reviewing the document copies that you have sent.
  4. Next up is that we will order a drive-by appraisal.  Usually, this takes 7-10 days.  Occasionally, we may request a full commercial appraisal, which can take considerably longer.
  5. Once the appraisal is complete and approved, we will order a title commitment, which takes another 7-10 days.  Whenever possible, we try to use the same title company that you used when you sold the property.
  6. To wrap it all up, we send you documents to take assignment of the note.  You sign those and send them back with the original note and deed.
  7. Once received, we record the assignment with the county and wire the funds to you.
From Step #3 to Step #7 usually takes 4-5 weeks.

Seascape Capital has been buying commercial notes since 2002.  We are always happy to provide you with various pricing options and answer any and all of your questions.  Feel free to call us or click “Contact Us” in the upper right corner of the page.


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