Home Selling in New Orleans>Question Details

Carter, Home Seller in New Orleans, LA

New Orleans what are the pros and cons with bond for deed or straight owner finance?

Asked by Carter, New Orleans, LA Mon Jan 31, 2011

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This comment does not constitute an agency relationship. This is just my opinion. Just what I was thinking at the time. Just my thoughts.

From the seller side:
Bond for Deeds (BFD's) suck if the buyer doesn't have some skin in the game. Make sure the individual is putting down a nice piece of change. Keep in mind that a bank didn't trust this person and they judge borrowers on daily basis. Protect yourself and your property. I would probably treat them more like renters than actual homeowners. Three clauses I would recommend putting in any BFD:

1st - 30, 60 or 90 day option to enter into the property with 24 hours notice.
2nd - mandatory refinance into permanent financing in the next 5, 10, 15 years. It all depends on your plan.
3rd - All payments will be held by an escrow service. This is really in the buyers favor because it helps build a payment history. It also takes you out of the collection phase of the BFD. this feature cost a few extra dollars.

BFD's can work but you have to plan ahead and use a great BFD attorney. I would definitely seek out a expert in this aspect of real estate law.

I hope this helps.
Web Reference: http://abrahamwalker.com
0 votes Thank Flag Link Thu Mar 17, 2011
For the seller, bond for deed offers a way to seller finance without as much risk as when being the mortgage note holder. As Ian alluded to, the seller can essentially repossess the property in case of default without going through foreclosure. The title does not transfer to the buyer until they refinance with a bank. A bond for deed arrangement is commonly structured with a three year term.

I agree with Lisa, that you should speak with a title attorney to learn more about the details.
0 votes Thank Flag Link Mon Jan 31, 2011
It depends on which side you are on..but bottom line, bond for deed is structured from the buyers perspective more like a rent to own..and if you don't pay on time, you stand to be evicted quickly almost as if you were a renter.

On the other hand, with either scenario you get to own a property, get the tax deductions on interest and homestead exemption if you live there as your primary residence.

I have gone through both and once everyone is on the up and up, it works out pretty well...and elminates the miscellaneous fees and points Banks like to charge.
Web Reference: http://iansellsnola.com
0 votes Thank Flag Link Mon Jan 31, 2011
Carter, you probably need to consult with a real estate attorney that can give you the specifics of each option. Southern Title would be my recommendation - they are experts at Bond for Deed.
0 votes Thank Flag Link Mon Jan 31, 2011
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