About Owner Financing Notes in Arizona

Owner Financing is done when a seller carry realtor finds a buyer for an owner carry home. The owner then creates a security instrument with a title company called a "promissory note". This "note" can be sold or bought by other investors at a reduced rate.

Why the reduced rate?

Anytime an owner is wanting to liquidate their funds from a property or this case a security instrument known as a note, there must be some incentive for the buyer or investor of the note. The average note sold on owner financed properties is about 15-20% less the note amount. Even if the note is secured for a length of time, the investor will end up buying the first deed of trust note for a reduced rate.

How can a seller sell their note?

The best way for an owner to sell their note on a seller carryback is to call a broker. Broker Executives, Inc.. specializes in owner financing and can connect you with a ready buyer/investor to purchase your note at a reduced rate. Some things to know before considering liquidating:

1. How fast do you need the money. If less than 30 days, expect to lose an extra 5% to receive funds early.
2. Tax consequences for liquidating on an investment property. 1031 exchange might be needed.
3. Do you need all the funds or just a portion? A portion is not typical. You usually need to sell the entire note.

What laws protect selling deed of trust notes?

There are no laws only common practices used to exchange the note with cash. For example, if you choose to sell your note, we would arrange for the investor to send money to a title company. The title company would ensure your note would only be released once funds have been received.

Can a buyer of a note back out once they've transferred money to purchase?

Once the investor transfers money to the title company and you sign off on the note, the contract we right up can hold a certain portion of the funds as earnest. This earnest can be used as damages if the investor does not execute the contract.

How to list your note for sale

There is not MLS system for note buying. Be aware of website trying to buy your notes. There are huge fees involved in a note broker. The most cost effective way is to use a broker that specializes in owner financing notes. The only costs incurred are simple title fees, transfer fees and broker costs.