Deed at closing or keep title until the last payment, on 40 acres I own free and clear

I'd price the remedy first and let that pick the instrument. At 265k with buyer A you're carrying about 212k, and if he stops at month 14 you're looking at legal fees, back taxes, possibly a receiver on nothing, and however many months your state takes to complete a judicial or nonjudicial sale. Call an attorney and get an actual estimate of that cost and calendar for both routes. If foreclosure in your state runs 8 to 14 months and a contract cancellation runs 60 to 120 days, that gap is worth more than the 75 basis points buyer B is offering. If both routes land in the same range, take the bigger down payment and the recorded lien.

One thing that pushed me toward the recorded note version. Every note buyer I've talked to while learning this side wants a promissory note with a recorded deed of trust or mortgage, clean title policy, and a payment history. Contract for deed paper trades too, just thinner and at a wider discount.

Whichever you pick, check how your county actually handles recording of a contract for deed, because that also differs by state. Some places record the contract and give the buyer a public interest, some don't, and an unrecorded contract creates a mess later when the buyer wants to sell or a lien attaches. I'd also ask your title company what they will and won't insure under each structure before you agree to anything with either buyer.

Buyer B is 12% down at 9%. That's a thinner cushion dressed up as a better yield.

I carried on a small four unit two years ago and did the deed at closing with a first lien back to me. What made me comfortable wasn't the instrument, it was 25% down and two years of the buyer's actual operating statements on other property. On land with no income to underwrite, buyer A's extra 8% down is doing more work for you than any clause I could write.

In my market contract for deed is how everyone sells raw ground and I've been on the buying end of two. Getting the property back after a default was fast in both cases, though neither went to court, the buyer walked and signed a cancellation. Orchard, that's the part people skip. The fast remedy is fast when the buyer cooperates. When he hires a lawyer and argues he has equity, you're in a real fight either way, and how that turns out depends on your state's rules and your attorney.

Did either buyer show you anything about income or reserves, or is the whole decision resting on the down payment number?

Rural low price stuff is almost all contract for deed where I look, on 5k to 40k lots, and it works because the balances are small enough that walking away is easy for both sides. At 265k I'd be a lot less casual about it. Buyer B has 32k in and a 9% payment on land that produces nothing. Year three when a tax bill and a survey dispute land in the same month, that 32k stops feeling like a reason to keep paying.

Something I'd want nailed down on 40 acres either way is whether he can split off pieces and what a partial release costs him. A buyer with a survey plan and no release clause will come back at month 20 asking for a favor, and then you're negotiating from behind. Beacon's term sheet idea covers that too, put the release language in the same draft both buyers see.

I want to be sure I have this straight. Under buyer A the deed goes to him and orchard holds a lien recorded against the land, and under buyer B orchard stays the owner of record until the last payment clears. So under B the buyer has paid money toward something he doesn't hold title to yet, and his protection is whatever the contract says plus whatever his state gives him. Is that right?

I'd be the buyer in this scenario, and buyer B's 12% down at 9% reads like a person stretching. I'd take that as information rather than as a yield. Juniper, that's how I understand it too, and it's why buyers I've talked to push hard for the deed at closing.

Land with no structure and no income means the only thing paying you is the buyer's job. I'd want to see it.

Does the instrument choice change how the sale reports for taxes, or is that a separate question entirely? My understanding is that spreading gain over the payment years is a function of how the sale is structured and reported, and contract for deed sales can get treated differently than a closed sale with a note back, so it's a CPA question in your state before you sign either version. Orchard, has yours weighed in yet?

Questions I'd want answered before I'd vote, and I'm asking mostly for my own file. What does each buyer intend to do with the ground, how does that affect your remedy if you get it back with a half finished driveway and a permit history, and does either of them have a plan to refinance you out by the balloon or are they hoping. The balloon at year seven is the real event here, and neither instrument helps you if the exit was never real.

Following up on my own point after reading beacon. The servicing record is what made note pricing work in the examples I've been shown, more than the instrument did. Two years of on time payments through a servicer, with a clean amortization schedule and verified taxes, is what a buyer of paper pays up for. Self collected notes with a handwritten ledger get discounted hard regardless of how the security was written.

Running the collections side for a few owners taught me the boring failure mode. The instrument almost never breaks. The insurance lapses, the buyer stops paying the county, or somebody loses track of what the balance actually is, and by the time anyone notices you're two years in with a fight over numbers. Whichever way you vote, orchard, put escrow of taxes and insurance in the documents, name yourself on the policy notices, and have somebody other than you keeping the schedule. That's cheap. The rest is your attorney's call on your state.