How We Earned Over $20K Selling Loans in Q2

What Does a Real Quarter of Loan Sales Look Like?

One of the most persistent gaps in mortgage note education is transparency around actual deal economics. Investors hear about returns, strategies, and case studies, but rarely get a clear look at the mechanics of earning income by selling distressed loans on behalf of a seller. This post breaks down five real transactions from Q2 -- every contract price, every fee percentage, and every lesson worth extracting.

Across five deals closed between May and June, we moved just over $1 million in unpaid principal balance for a total contract price of $530,000 -- roughly 50 cents on the dollar. The total sales fees earned: $20,440, representing an average fee of 3.9 percent of the contract price.

Those numbers tell the story at a high level. The individual deals tell you far more about how pricing works, what drives fee percentages, and why loan quality is the single most important variable in the equation.

How Did Each Deal Break Down?

Here is the full transaction-by-transaction breakdown from the quarter:

Every one of these was a non-performing loan. Every one sold through a competitive auction process. And the variation in pricing -- from 24.6 percent of UPB to 82 percent -- illustrates a principle that experienced note investors understand intuitively but newer investors often underestimate: not all NPLs are created equal.

Why Did Pricing Vary So Dramatically Across These Deals?

The spread between the lowest sale (24.6% of UPB) and the highest (82% of UPB) is enormous. That gap is not random. It is driven by a handful of measurable characteristics that sophisticated buyers evaluate before placing a bid.

Deal 1 -- the single second mortgage that sold at 45.7 percent -- represented a solid middle-of-the-road asset. The borrower owed roughly $80K on the junior note, and the deal attracted a buyer willing to pay nearly half of that balance. The fee on this trade was the highest of the quarter at $4,048 and 11 percent of the contract price, reflecting the value added in sourcing and facilitating a one-off transaction.

Deal 2 -- the three-loan package at 26.9 percent -- sold at a steeper discount for specific reasons. Some of the senior lien pay histories were not as clean, and there was less equity behind these loans compared to the first deal. When the senior mortgage is not current, the risk profile for the junior lien holder changes materially. Add to that the package discount -- buyers expect a lower per-asset price when purchasing multiple loans in a single contract -- and the lower percentage makes sense.

Deal 3 -- the single second at 24.6 percent and a fee of just $285 -- was the lowest-quality asset of the quarter. The math is straightforward: a $9,500 contract price does not generate a large fee regardless of the percentage. Small-balance, lower-quality seconds trade at the deepest discounts because the resolution costs (legal, servicing, time) are relatively fixed regardless of balance size.

Deal 4 -- the California second at 82 percent -- is the standout. This loan commanded a premium price because it checked every box a buyer looks for: a current first mortgage, meaningful equity in the property, and a California location where property values provide a strong collateral cushion. When the senior lien is current and the borrower has equity, the probability of a successful resolution -- whether through a modification, reinstatement, or discounted payoff -- increases dramatically. Buyers priced that probability into their bids, and the winning bid at 82 cents on the dollar reflects how competitive the market becomes for high-quality paper.

Deal 5 -- the 32-loan package at 51 percent -- was the volume play. A loan pool of this size, mixing firsts and seconds with a combined UPB of $792,000, sold for $405,000. The sales fee was only 3 percent of the contract price, but at over $12,000, it was the largest dollar-amount fee of the quarter. This is the trade-off with bulk sales: the fee percentage compresses, but the absolute dollar amount scales with volume.

What Determines Whether You Earn 3% or 11% in Sales Fees?

Fee percentages in loan brokerage are not standardized. They are negotiated based on deal size, complexity, and the value the intermediary brings to the transaction.

The pattern from this quarter is instructive:

• Single-asset, moderate-value deals commanded the highest fee percentages. Deal 1 earned 11 percent because facilitating a one-off sale requires nearly the same amount of work as a larger trade -- sourcing the buyer, coordinating due diligence, managing the closing process -- but on a smaller contract price. The fee percentage compensates for the effort relative to deal size.

• Bulk packages compress fee percentages but increase total dollars. Deal 5 earned only 3 percent, but that 3 percent on a $405,000 contract generated more than $12,000 in income. The seller benefits from moving a large volume in a single transaction, and the intermediary benefits from the scale.

• Low-balance, low-quality assets generate the smallest fees in absolute terms regardless of percentage. Deal 3 produced just $285. These deals are worth doing as part of a broader pipeline, but they are not the foundation of a sustainable brokerage business on their own.

The lesson for anyone building an income stream through loan sales is straightforward: you need a mix of deal sizes. High-percentage fees on one-off trades provide margin. Bulk trades provide volume. Neither alone is sufficient.

What Drove the Difference Between This Quarter and Last?

Context matters. The previous quarter generated $91,000 in sales fees -- more than four times the Q2 result. That is a significant swing, and it deserves explanation.

The difference was not driven by a market shift. It was driven by the quality of the assets offered for sale. The prior quarter featured higher-quality loans that commanded higher prices as a percentage of UPB, which in turn generated larger fees.

This is the natural ebb and flow of the secondary mortgage market. The inventory available in any given quarter depends on what sellers have on their books and what they choose to bring to market. Some quarters produce premium assets that trade at 60, 70, or 80 cents on the dollar. Other quarters produce lower-quality paper that trades at 25 or 30 cents. Your sales revenue will fluctuate accordingly.

The takeaway is not that one quarter was "good" and another was "bad." Both were productive. The takeaway is that consistency in deal flow matters more than any single quarter's results. A brokerage operation that processes deals every other month -- maintaining a regular cadence of offerings -- will smooth out the peaks and valleys over time.

How Does Loan Quality Affect Sale Price?

If there is one theme that emerges from these five deals, it is this: loan quality is the dominant variable in secondary market pricing.

The factors that separate a 25-cent-on-the-dollar loan from an 82-cent-on-the-dollar loan are identifiable and measurable:

Senior lien status. Is the first mortgage current? A second lien behind a performing first is dramatically more valuable than a second behind a delinquent first. When the senior is current, the borrower is demonstrating willingness and capacity to make at least some mortgage payments. When the senior is in default, the entire collateral stack is at risk.

Equity position. How much equity does the borrower have in the property? Equity creates options. A borrower with equity can refinance, sell the property and pay off the note, or negotiate a workout from a position where all parties can recover value. A borrower with no equity has fewer paths to resolution, and the buyer prices that limitation into their bid.

Property location and value. The California loan traded at 82 percent of UPB. California real estate values provide a larger equity cushion, a more liquid market for property disposition, and a generally more favorable risk profile for the note holder. State-level factors -- including foreclosure timelines, borrower protections, and property appreciation trends -- all flow into pricing.

Package vs. single-asset pricing. Buyers expect a discount when purchasing multiple loans. The three-loan package in Deal 2 traded at 26.9 percent partly because it was a package. Buyers apply portfolio-level risk assessments to packages, and the weakest loan in a group can drag down the per-unit pricing for the entire bundle.

What Can You Learn From These Numbers?

Whether you are a note investor looking to sell assets from your own portfolio, a broker building a loan sales business, or a buyer trying to understand how the sell side thinks about pricing, these Q2 results offer several practical takeaways.

Takeaway 1: Understand the Fee-to-Volume Trade-Off

Small, high-margin deals and large, low-margin deals serve different functions in a brokerage business. Build your pipeline to include both. Do not chase volume at the expense of margin, and do not limit yourself to one-off trades when bulk opportunities are available.

Takeaway 2: Loan Quality Drives Everything

You cannot control market conditions, but you can control which assets you bring to market and how you position them. A well-underwritten, clearly documented loan with a current senior and strong equity will always command a premium over a poorly documented asset with uncertain collateral value. Invest the time in due diligence and presentation before listing an asset for sale.

Takeaway 3: Competitive Auctions Extract Maximum Value

Every deal in this quarter sold through a competitive auction process. When multiple qualified buyers bid against each other, the seller captures more of the asset's value than in a bilateral negotiation. If you are selling notes, structure your process to create competition. If you are buying, understand that the best assets will attract the most aggressive bids.

Takeaway 4: Consistency Beats Any Single Quarter

Q1 produced $91,000 in fees. Q2 produced $20,440. Both quarters were productive. The business generates value because deals flow consistently, not because any single quarter hits a home run. Build systems and relationships that produce deal flow on a regular cadence -- monthly, bi-monthly, quarterly -- and let the compounding effect of consistent activity drive long-term results.

Takeaway 5: The Market Rewards Specialization

Facilitating these transactions requires specialized knowledge: understanding how to evaluate non-performing loans, knowing what buyers look for, pricing assets accurately relative to their risk profile, and managing the closing process from letter of intent through funding. These are not skills that casual participants develop overnight. The sales fees earned in this quarter -- and every quarter -- flow to operators who have invested the time to build genuine expertise in the secondary mortgage market.

The Bottom Line

Five deals. Just over $1 million in principal balance. $530,000 in total contract value. $20,440 in earned sales fees. That is what a real quarter of loan sales looks like in the secondary mortgage note market -- not theoretical projections, not back-tested models, but actual transactions with actual dollars.

The variation between the 24.6-percent trade and the 82-percent trade is not noise. It is signal. It tells you that loan quality, collateral position, and asset-level characteristics drive pricing far more than macro market conditions. It tells you that bulk volume and single-asset margin serve different but complementary roles in a brokerage business. And it tells you that the investors and intermediaries who understand these dynamics -- who can evaluate a loan, position it correctly, and execute a competitive sale process -- are the ones who earn consistent income in this market.

The secondary market does not reward passive participation. It rewards preparation, deal flow, and the discipline to show up quarter after quarter, regardless of whether the number is $20,000 or $91,000. The fees are earned. The results compound. And the opportunity -- for those willing to build the skill set -- is as real as the numbers on this page.