Many of our clients are emailing us properties that state the owner is willing to carry financing, but when we contact the listing agent they state the owner is only willing to assist with a down payment. Or even worse, they say the owner is willing to carry financing that is arranged through a title company as an agreement for sale which is another phrase for land contracts.

An Agreement for Sale type of owner financing

An agreement for sale is not a true seller carryback. A true seller carryback is done with a first deed of trust. The deed of trust gives the owner the full rights to mortgage, convey and the lease the property to another if desired. An agreement for sale or a land contract does not give the buyer any type of title to the home until the note is paid in full. Meaning the buyer cannot mortgage the home, refinance or sell the property for a profit. This is equivalent to leasing a home. If you are interested in locating a seller carryback please contact us so we can setup a search for you.

How our office handles Owner Financing Properties in AZ

We will also contact the owners and listing agent to make sure the owner is truly offering you warranty deed to the property, giving you all the rights as someone would have going through a regular bank.

Arizona offers owners a chance to become lenders as they offer financing for buyers. Buyers looking for seller carryback financing can look at homes that offer Trust Deeds.

Search Seller Carrybacks | Owner Financing Homes in AZ

First Deeds of Trust is a form of a Seller Carryback

Properties offering Trust Deeds give the buyer all the legal rights someone would have if they obtained a loan from a bank. They can refinance, sell the property, take a 2nd mortgage and lease the property if they choose. What buyers need to be aware of is the difference between a first deed of trust and an agreement for sale. Both appear to be a seller carry but only the first deed of trust offers true ownership of a property.

The Trust Deed is important but the mortgage note is just as important. Even when you finally find an owner with a seller carry back offering a deed of trust, you need to review the mortgage note document to ensure there are no balloons or adjustable rates that could increase. The title company you service the trust deed with should examine the deed and the note for you and advise you anything that could be of importance. If you are interested in a seeking a seller carryback, please don’t hesitate to contact us.

How a seller carryback in AZ works

Most AZ seller carrybacks require a minimum down of 10%. This allows the seller to pay for closing costs, escrow costs and real estate costs accrued in selling the home. Once a buyer has found a seller carryback, it’s a matter of coming to an agreement of terms with the seller. In most cases, a seller financing home will have a couple options the seller can execute for the seller financing. Those options include a land contract also known as an agreement for sale or a deed of trust seller carry. There are two options the seller has when it comes to offering seller financing.

Land Contract | Agreement for Sale

Not the best option for the buyer, because the seller can foreclose on the buyer much faster for nonpayment. The buyer also does not hold title to the home, which can present to be a problem for tax purposes and tax credits. And since they do not hold title to the home on an agreement for sale, they cannot sell the property through the MLS or refinance the home. This is the worst type of seller carry.

First Deed of Trust | Deed of Trust

This is the strongest type of ownership for a seller carryback. This type of seller carryback is equivalent to a buyer obtain a loan from a bank and purchasing the home. The term Deed of Trust is the type of title the buyer is receiving and is a common term used on any sale when title is being transfered.

Common reason why a seller would not offer a deed of trust in a seller carryback

-They owe a mortgage on the home
-The current lender has a due on sale clause preventing title from being released to the new buyer without the current lender being paid off
-The owner is skeptical of the buyer defaulting and needs an option to foreclose quickly

Lease Options vs Seller Carrybacks

A lease option is dangerous because the money put down can easily be lost if the seller defaults on the mortgage payments. A seller carryback will allow the buyer to make payments directly to the lender which will always put the buyer at a better advantage.

Seller Carryback Financing | Owner Financing Homes

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There are several ways to sell your property. In a market where there are homes flooded with foreclosures and potential buyers are walking away from properties only to have a recent foreclosure, it become difficult to sell a home. The best option to sell your home is to offer seller financing. There are several ways to arrange this and easily sell the property to a future qualified buyer. An Agreement for Sale gives the owner the option to sell to a buyer and relinquish title once the balance has been paid in full. This can be setup through a title company and is used most often because most owners still owe a mortgage on their property. However, this type of financing is not always preferred by buyers because the foreclosure time is greatly shortened in an agreement for sale, also known as a land contract. This method is also not preferred by buyers because they do not hold title to the property, therefore cannot refinance to pay the note off, which in this case is the owner.

The most preferred method to offer seller financing is to arrange a deed of trust. This gives the buyer a warranty deed and makes the owner the Trustee to the property. This gives the buyer a chance to refinance the home when they can qualify. The owner can have a title company service the note and even create a note stating the new buyers must pay the entire note off within 5 years, called a balloon. Time frames can vary, but what should be remember in this type of financing is the risk associated with it. If the owners current note stipulates the title cannot be transferred or conveyed without the current lender being paid off then you may not want to proceed with this method of seller financing. Simply because the lender can “call the note due.” Because you have transferred the title without paying the lender off. This is very rare and I would think not even being enforced due to the high volume of short sales on loan modifications being done by lenders.

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