Because of our participation in the secondary market for seller-carried financing, we can provide you with a consistent, reliable valuation service for seller-carried financing on all types of property.

The valuation of any obligation depends on the evaluation of the terms of the obligation, taking into consideration the following:

• Risk (Payor credit, property type & location)
• Market conditions (including current interest rate levels)
• Liquidity (how desirable the obligation is in the market)

The structure of an obligation is key in determining value. The six most important factors affecting value are:

• Term of the financing
• Type of property/location
• Loan to value ratio
• Credit of Payor
• Documentation of obligation
• Payment record of Payor

The “structure” or terms of the obligation you hold have a considerable impact on its real market value. Listed below are some of the more important items which increase the value or salability of an obligation versus those items which decrease the value or salability of an obligation.

Value Increased

• Properly structured balloon payments or release clauses
• Equity position of 20% or more
• 1-10 year maturities
• Late charge provision in note
• Timber cutting clause on acreage properties
• Due on sale/right to approve Assumptor clause
• Cross default clause in junior liens
• Step rates which increase interest rate over time
• Flood insurance if property is in flood zone
• Good Payor credit – Professional administration of receivable
• Seasoned note with satisfactory payment history
• Market interest rate for risk involved
• Financial statement on Payor

Value Decreased

• Long term fully amortizing obligations (no balloons)
• Subordination clauses
• Limited equity/Small down payments
• Small size note or contract
• Bad Payor credit
• No due on sale or Assumption/Approval right
• Poorly structured Deed Release provisions
• No timber cutting clause on acreage properties
• Large amount of debt senior to subject debt (on junior liens only)
• No late charge provision on the note
• Property in a flood zone without flood insurance