Selling Home on Land Contract?

[wshupnastar]

My family is hoping to move somewhere much warmer than Indiana (hopefully near a certain Mouse we all know and love) and we will need to sell our home. We still owe quite a bit on it (been here 5 years) and were going to just try to sell it outright. However we actually have 2 different buyers who are interested in doing a Land Contract. I would have never considered it, but it looks like we can sell a lot faster this way.

Obviously, I would retain a lawyer to take care of the legal stuff. However, I would love it if I could get some "real world" advice from anyone who has either sold or bought on a land contract. I am sure there are things you know that I would never even begin to think of!

Thanks!

 

[seashoreCM]

Land contracts may or may not protect the buyer adequately depending on what state you are in and how the land contract is drawn up. It would be up to the buyer to make sure the land contract is structured suitably for him. The most obvious problem is that, if you (the seller) should get sued, the rug (and the house) might be pulled out from under the buyer in some states.

Next possible problem is a non-assumable mortgage on the house at the time of sale. Almost all mortgage loans nowadays are not assumable. That is, the buyer does not have the right to take over the payments. Should the bank find out the house has been sold or transferred via a land contract, it reserves the right to call the entire balance due (accelerate the loan) and foreclose if it (the bank) is not paid off in full. This defeats the primary purpose of a land contract, to avoid having to qualify for new financing.

 

[Tinkerbelle99]

Legal counsel is very important on this type of deal, for both sides. Land contacts tend to work best between parties that are somewhat known to each other.

With a land contract you would as the seller, require a large deposit. Large enough to make the purchasers greatly invested in this property. you will then have to agree on terms for the remainder of the monies owed, interest rate, etc. Your contract also needs to spell out how the deed to the property will be handled. and it does vary from state to state.

You as the sellers and true owners of the home, will still be responsible for the mortgage (as most mortgages are non-assumable). Which is where having a known buyer & large deposit helps.

I bought a home, one upon a time ago this way. It worked out well for both parties (we were/are family).

Since that time, I have become a Realtor. Not too many land contracts have I personally worked, but with the right guidance and proper contracting it can work out nicely for both parties.

 

[*pixie*dust*]

I would strongly advise against a land contract! Unless you are going to stay in the area and monitor the property and tennant closely, it can be a disaster.

 

[Cheshire Figment]

You are still the primary name on the mortgage, and it will show as an open account on your credit reports. This could possibly make it difficult for you to get sufficient financing on a new house.