Owner financing is widespread in Texas, from houses in the big metros to acreage in the Hill Country. We take your note to competing buyers and show the worksheet behind every offer.
Texas habits that hand the pricing advantage to the buyer.
The same worksheet comes with every offer.
| Remaining balance | $129,400 |
|---|---|
| Payments left | 168 |
| Buyer’s target yield | 8.0% |
| Purchase price | $115,000 |
| Discount from balance | 11.1% |
| Our fee | shown on every offer |
| Sell the whole note | Sell 60 payments | Keep it | |
|---|---|---|---|
| Cash today | $115,000 | $56,200 | $0 |
| Payments still coming to you | None | 108 payments of $1,140 | 168 payments of $1,140 |
| Total you receive | $115,000 | $179,320 | $191,520 |
| What you give up | Every future payment | The next five years | A lump sum now |
Illustrative example. Totals add up the payments as scheduled; they assume the payer keeps paying and are not adjusted for the value of money over time.
The promissory noteThe mortgage or deed of trustA payment historyThe closing statement from the saleOwner financing is used freely in Texas. Investors in Houston, Dallas and Fort Worth, San Antonio and Austin sell houses on terms as a business. Land developers sell lots and small acreage the same way in the Hill Country, East Texas and the counties ringing the major cities. Ranch owners carry notes when they sell off a tract, and families in El Paso and the Rio Grande Valley have long sold homes to buyers who do not use banks. A Texas note holder might be a retiree with a single note or an investor with twenty, and the sale works the same way for both. An investor whose notes reach into Oklahoma, Louisiana or New Mexico holds them under different rules, set out state by state.
In Texas a note is commonly secured by a deed of trust, a recorded document naming a trustee who can sell the property if the payer defaults. Foreclosure is commonly non-judicial, which means the trustee’s sale generally takes place without a lawsuit, under a procedure laid down in state law. That generally keeps a buyer’s expected recovery cost down, which works modestly in your favor.
Texas also gives a person’s homestead strong legal protection, which limits the kinds of lien that can attach to a home. A buyer will look at how your lien was created. Where a note taken back at the sale stands under those rules, and what the current foreclosure procedure requires, are questions for a Texas attorney or title company.
Price comes from what the buyer needs to earn on their money, which they get by paying you less than the balance. On a Texas file the review then turns to the points below.
In a wraparound, the property still carries an older loan and your note sits on top of it. A buyer of a wraparound mortgage note needs the balance and status of that loan and proof of who is paying it.
Texas regulates these on residential property, and some holders have replaced theirs with a note and deed of trust. If you still hold a contract, a buyer will check how it was set up and will price a contract for deed differently from a mortgage. Wrap or contract, say which in the first line when you give us your note details, along with the county.
Owner-financed deals often leave the payer to handle taxes directly. Unpaid property taxes can come ahead of your lien, so a buyer checks the county tax record, and you can check it before they do.
Buyers also review how the loan was originated. Keep the closing documents from your sale with the file, along with a note of who prepared them.
The part of the price within your reach is what the buyer can verify. A recorded deed of trust, a third-party servicer’s payment history, current tax receipts and proof of insurance each remove a doubt that a buyer would otherwise charge for. Of the four, the tax record is the one you can check today without anyone’s help, by asking the county tax office if the account is current.
Yes, though the buyer pool is smaller. A buyer needs the full details of the underlying loan, including its balance and who is making that payment. Disclose it at the start, because it will appear in the title search.
Some buyers purchase them and some will not. Texas regulates contracts for deed on homes, and buyers check how yours was set up. A Texas attorney can tell you where it stands and if converting it to a note and deed of trust makes sense.
Not by itself. Homestead rules concern which liens can attach to a person's home. A buyer will confirm how your lien was created as part of their review, and a Texas attorney can tell you where a note taken back at the sale stands.
Owner financing is widely used in Texas, so its deed of trust paperwork is familiar to note buyers. How many of them bid depends on the note: a well-documented first lien draws more interest than a wrap or a contract for deed.