There are 3 main areas that are considered when valuing a note or contract:

• The Property-The type and condition of property and its current market value.
• The Borrower-Does the buyer make timely payments, are the buyers credit-worthy.
• The Note-What interest rate, how long does the note have to pay.

A note is a promise made by the borrower to pay.  When valuing that promise to pay we must consider the likelihood that the buyer will default.