Selling a house on contract can benefit a homeowner by creating a steady stream of monthly income while also appealing to buyers who may not qualify for a traditional mortgage.
Keep scrolling to learn about what selling a home on contract means.
Using Land Contracts
Land contracts or contracts for deed are a security agreement between a Vendor and a Vendee (seller and buyer). For a seller, it means they agree to finance the purchase for the buyer, which replaces needing to go through a mortgage company. Once you settle on a price, the buyer makes the payments to the homeowner, who keeps the title to the property until it’s paid off. The buyer typically makes a set number of payments over a few years and then a balloon payment at the end. When the payments are complete, you then transfer the title to the buyer.
Benefits of Land Contractors for Sellers
A few benefits to consider when selling on contract include:
- Immediate resolution – If you need to sell a home quickly, selling under contract provides you with immediate additional income now to pay your existing mortgage, along with a new mortgage or lease. This prevents you from waiting months or even years waiting on a sale, which is optimal if you need to relocate immediately for a job or need to pull the trigger on a dream home quickly.
- Increase buyer pool – When you list a home under contract, your buyer pool increases, opening you up to a wide array of buyers. This gives you the potential to earn more money on the sale, sell the home quickly, or both. Lease-to-own agreements can often drive more traffic through your home with the pressure of choosing this non-traditional route.
Drawbacks to Selling on Contract
As there are benefits, there are also drawbacks to selling a home on contract, which include:
- No guarantee of sale – A land or lease-to-own contract can vary by individuals, and the specifics may not be the best fit. For example, in most cases, there’s a stipulation that a buyer can walk away from the sale at the end of the contract if the area or property becomes unsuitable or he can’t secure financing. Usually, the seller can keep the deposit and extra monthly payments as a settlement, but some contracts require you to return them, so keep that in mind. In the end, you are back to square one trying to find a buyer.
- Responsibility as Landlord – Managing a rental property is a lot of work and something you may not want the responsibility of, so think twice about doing a land contract. You are responsible for repairs (unless you specify the buyer will handle them) and any damage to the home, as well as non-payment. Needing to file legal documents is expensive if problems arise, so you must have an iron-clad contract upfront.
Contact Fast Oklahoma House Buyers for Help
Need to sell your home in Oklahoma County and Tulsa, Oklahoma, without the worry of financial problems from buyers or waiting for an offer? Give us a call and let us buy your home outright. With no fees, commissions, and no obligation, we offer a quick sale with a speedy closing of your choosing. With money in-hand quickly, you have nothing to lose but an unwanted mortgage. Call us today.