A mortgage note or A Purchase agreement?

Question

I am setting up my first owner financed property to a buyer. I was reviewing the options between putting the deed in the buyer's name or use a purchase agreement and keep it in the companies name. Ultimately I want to sell the performing note. If I were to use a purchase agreement would I approach note buyers with that? The only difference is the deed remains with the company until the balance is met. Sorry to sound so simple, I had been digging around and couldn't really find a straight answer.

Wayne Brooks · Answer

They are two different things:

1) A sale, where title passes to the buyer, and you hold a note and mortgage

2) A Contract For Deed (called different things in different states).

Usually a note is easier to sell than a CFD.

Also, the discount you probably will have take on the note, even if performing, will be greater than just selling it outright, for a slightly lower price.....just the way the market prices seller carry notes, and CFD’s.

Chad U. · Answer

You'll want to have this done via escrow and have an attorney draft the docs, to ensure it is compliant with Dodd - Frank and CFPB requirements.  Otherwise, you may have a defective note that is much less valuable than the face value that you wrote it for.

Matt Salway · Answer

Hello! I am starting a note investing business in the Hampton Roads part of Virginia and would love to discuss your experience so far

Jairus King · Answer

So- To add updates: In my area VA- Multiple attorneys that  I have used are more comfortable to doing CFD. One of the larger benefits to this is that it is easier to correct if the homeowner defaults. I did sell one of mine, but still have a few others. So I do believe different companies/investors will have interest in either one if they are performing.

Mike Justice · Answer

Great Read , Thanks,

Mike.

Terry Schell · Answer

Hi Jairus -

Just saw your Post and would like to know if you did sell your Note, and if you have any others for sale?  I buy Notes & Mortgages.  Let me know if  you care to discuss this further.  Thanks.  Terry Schell,  I am in Houston, TX.

A mortgage note or A Purchase agreement?

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