What is a Land Contract?
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Simply put, a land contract is a contract for deed. It’s Owner Financing. Terms set between Buyer and Seller.
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When you sell your home on land contract, you are cutting the banks completely out of the deal. You can set the terms based on your cost, your committments, the buyers ability to pay and any other factors you and the buyer deem important.
How Hard is a Land Contract?
Well I’m glad you asked! A Land contract is so simple that even the average buyer and seller can understand the terms.
If you have never bought a home through a bank you probably don’t know how much paperwork there is for you to sign and initial. I dare say there could be 40 or 50 pages or more even. They have made getting a home loan through a bank or finance company so intimidating and the contracts so confusing that most people don’t even read them. They simply trust that the banker is or broker is looking out for them. That couldn’t be further from the truth. It’s all done so they have an advantage over you. It protects them and their investment.
Compare that to a Land Contract. Most Land Contracts can be completed on 1-3 pages. All the terms will be spelled out in plain and simple language like it should be. How hard is that?
How does a Land Contract benefit the Seller?
Well the seller is selling the home on Land Contract, you can take a look at the amortization chart. On a $100,000. 00 loan at 6% for 30 years, you will collect $115,838.53 in interest alone. What!!?? You mean you sell a hundred thousand dollar home for $215,000. plus?
Ok so what if they default? Well, You should have gotten some money down and they have probably made payments for a while. You should be able to keep that and resell the home. You should come out very good if you have serviced your loan and made sure you were protected in the contract.
How does the Buyer benefit with a Land Contract?
If this is truly a Win Win meeting of the minds, the buyer should be getting a good deal too. Less down payment than required through a lender, Maybe you are not as scrupulous with their credit score. The financing terms can be easily taylored to meet the needs of both parties unlike bank financing. This may be just what a buyer needs to get them into a home immediately. If buyer and seller are working together to make this a Win Win situation, it can be wonderful. Caution though to make sure both parties are working toward the Win Win