If you sold property in Arizona and carried back the financing, you can sell that note for cash. You can sell all of it or just part of the payments. This guide covers the two ways Arizona deals get written, the rules that matter, and how a sale works.
I buy Arizona notes. Here's what I look at.
Short version: Most Arizona carryback notes use a deed of trust. Those sell well, and Arizona's trustee sale process is clear. Some deals use an agreement for sale instead. Arizona has set waiting periods for those, based on how much the buyer has paid.
Two kinds of Arizona seller financing
1. A note with a deed of trust. This is the most common setup. You deed the property to the buyer at closing. They sign a note and a deed of trust that secures it. You're the beneficiary. Arizona folks often call this a carryback.
2. An agreement for sale. This is Arizona's name for a contract for deed. You keep title until the buyer pays in full. These are less common today, but they still show up, especially on land.
Not sure which you have? If the buyer got a deed at closing, you likely have a deed of trust. If you still hold title, it's an agreement for sale.
Notes with a deed of trust
Arizona allows trustee sales without going to court. The rules are in Arizona Revised Statutes, Title 33, Chapter 6.1.
- Notice comes first. The trustee records a notice of sale. The sale can't happen until at least 90 days later.
- The payer can catch up. The payer can usually reinstate by paying what's behind before the sale.
- Deficiency limits. Arizona limits deficiency judgments on many homes, especially homes on 2.5 acres or less. That means the property value matters a lot.
A clear, nonjudicial process is a big plus for a note buyer. It's one reason Arizona deed of trust notes are attractive.
Agreements for sale in Arizona
If the buyer falls behind on an agreement for sale, Arizona law sets a waiting period before forfeiture. It depends on how much of the price the buyer has paid. Under A.R.S. 33-742:
| Paid toward the price | Wait after a missed payment |
|---|---|
| Less than 20% | 30 days |
| 20% to under 30% | 60 days |
| 30% to under 50% | 120 days |
| 50% or more | 9 months |
After that, the seller serves a notice of election to forfeit. The buyer gets at least 20 more days to catch up and keep the contract.
So the more the buyer has paid, the longer it takes to get the property back. A buyer of your note prices that in. Many agreements for sale also use an account servicing agent to hold the deed and collect payments. That's a plus when you sell.
I'm not a lawyer. For legal questions about your contract, talk with an Arizona real estate attorney.
Other Arizona rules to know
- Title and escrow companies close deals. Arizona closings usually run through escrow. Plan on that when you sell.
- Licensing rules can apply. Arizona has licensing rules for people who make home loans. Some seller financing is exempt. A buyer will check that your deal fits.
- Check the servicing agent. If an account servicing company collects your payments now, the sale needs to update their file too.
Why this affects your price
A note buyer is buying your right to collect. They also take on the risk that the payer stops paying. A deed of trust note with a 90-day trustee sale is lower risk. An agreement for sale where the buyer has paid half or more takes much longer to resolve.
Equity matters as much as paperwork. A payer with 20% or more equity and a year of on-time payments brings the best prices.
What a buyer will check
I look at three things on every deal: the payer, the property, and the paperwork.
- The payer. On-time history, how long they've paid, and whether they live in the home.
- The property. What it's worth, its condition, and whether taxes and insurance are current.
- The paperwork. The signed note and deed of trust, or the agreement for sale. Proof it was recorded. Your closing statement. Any title policy and servicing agent records.
How the sale works, step by step
- Get a quote. Send the balance, rate, payment, and payment history. Start here.
- Send copies of your papers. See the documents you need to sell a mortgage note.
- Due diligence. I order a title search and a property value check, then confirm the balance with your payer. Plan on two to three weeks.
- Close. You sign an assignment of the deed of trust and endorse the note. A title or escrow company handles it. You get paid.
- Your payer gets a letter. It tells them where to send payments. Their terms don't change. Read what happens to the payer when you sell.
Most sales close in about four to five weeks.
What your Arizona note is worth
Most notes sell for less than the balance, because the buyer pays you today for payments that come in over years. Typical notes sell for about 70% to 85% of the balance. Strong ones can bring more. Thin-equity notes and land-only deals come in lower.
Try the note value calculator for a rough range. Or get a real quote. You can also sell just part of the payments. See how a partial sale works.
Frequently asked questions
Can I sell an Arizona agreement for sale?
Usually, yes. The buyer will check that it was recorded and look at how much the payer has paid, since that sets the forfeiture timeline.
What is a carryback note in Arizona?
It's a note the seller carries back when they sell a property. The buyer pays the seller over time, and a deed of trust secures it.
Do I need my payer's permission to sell?
Usually not. Most notes can be sold without the payer's consent. Check your paperwork for any clause about assigning it.
Can I sell a note on Arizona land?
Often, yes. Land notes sell for less than home notes, because land is harder to value and resell. A strong payer helps a lot.
How long does it take?
Most close in about four to five weeks from the first quote.
Will I owe taxes when I sell?
You might. Arizona has a state income tax, and federal tax applies too. Read taxes when you sell an owner-financed note and talk with your CPA.
Selling in Texas instead? Read how to sell an owner-financed note in Texas.
Larry has invested in real estate since 2006 and has bought more than 300 mortgage notes. He runs LJH Investments, LLC, an Ohio company based in Madison, Indiana. More about Larry
This article is general information, not legal or tax advice. Laws change. Talk with your own attorney and tax adviser about your situation.