Selling Land Contracts Online To An Experienced Buyer

Selling a land contract is a common transaction within the overall real estate financing space. A person or entity collecting installment payments has the ability to sell a land contract for a lump sum of cash now, instead of holding the land contract over a long-term period. A land contract holder can choose to sell all, or just a portion of their land contract, depending on their capital needs. We will take a deep dive into the sale process as well as fully explore all options and pricing factors below.

First things first. What is a land contract? In real estate, a land contract is a way to purchase real property without qualifying for a traditional mortgage. Also known as an “installment land contract” or a “contract for deed,” this type of house contract occurs solely between the buyer and seller, where the seller agrees to finance the sale of the property until such time as the buyer pays the sale price off in full. 

Though contracts for deed have largely fallen out of favor in the last few years, this type of seller financed home purchase is usually thought to be a viable option for buyers with poor credit, who would otherwise be unable to qualify for a traditional mortgage. However, in addition, those who face the possibility of higher interest rates if they were to go the conventional financing route may also want to consider land contract homes as a more affordable alternative.

As a seller, you may want to consider entering into a land contract or a land sale contract if you live in a market where it is hard to find a buyer who qualifies for traditional financing.

Another question that needs to be answered is how does a land contract work? Traditionally, a real estate land contract will take one of two forms. We’ve explained each of them in detail below so you’ll understand the differences between them.

Straight land contract

For the most part, the difference between buying a house with a regular mortgage and buying it through a straight land contract has to do with the title to the property. In a traditional financing scenario, the buyer is given legal title to the property as soon as all the paperwork is signed.

With a land contract, the seller keeps the legal title until the contract is paid off in full. For their part, the buyer is given the equitable title, which allows them to build up equity in the property as they continue to make installment payments.

Wrap-around land contract

Wrap around land contracts are used when the person selling the property still has an existing mortgage on the property In this type of financing scenario, there is an additional consideration beyond just the transfer of title and that’s how the existing loan will be paid off. Usually, the seller will take an installment payment from the buyer, use it to pay their debt to the existing lender, and keep any overage as profit.

1. Gather all of the pertinent data on the land contract you wish to sell
2. Provide those details to the buying entity for a firm quote
3. Decide if the amount offered is right for you and proceed with the sale
4. The buying company will perform the review and underwriting process
5. The buying entity will fund the transaction the contract seller will receive their cash

If your question is, I want to sell my land contract but what is the starting point? The process is actually very simple for the contract seller. Before you begin the land contract sale process, make sure you have all of the necessary information to receive a land contract quote. This will include the property address, the financed, loan amount, the interest rate, the payback period, and the name of the property owner/buyer. If you are not sure, or you are missing any information pertaining to the land contract for sale, please feel free to contact us and speak to a live person to answer your questions directly.

This entire process of selling a land contract will take anywhere from 15 days to 30 days depending on the state/property location, the availability of the local appraisers, the availability of the title companies providing the title search, etc. We pay for ALL costs associated with the purchase of your asset, including appraisal, BPO, and title fees.

There are various reasons to sell a land contract on the secondary market. Motivations are certainly different but the end people want their cash to move on with their financial goals.

For most holders that have a land contract they are collecting on, the reasons for selling usually fall under one or more of these categories:

• To alleviate an imminent financial necessity
• To rid themselves of mundane administrative responsibilities and tasks
• To recycle capital into a new investment with a higher rate of return
• To relieve collection concerns and chasing payments from borrowers
• Receive Medicaid approval for a senior living facility 
• Lifestyle changes such as a new home or luxury purchase
• To mitigate against bankruptcy or foreclosure concerns that may arise
• To exit a capital partner out of a business relationship

How is market value determined on a land contract being sold to an investor on the secondary mortgage market? This is a question that comes up many times daily in this industry. There are many primary and secondary variables that come into play when determining the value of a real estate receivable for sale.

Below is a list of items that sellers should be aware of when taking their asset(s) to market:

Primary variables:

Down Payment – 15% to 30% for best pricing (Primary variable)

Credit Score of Borrower – Low average to high FICO scores for best pricing (Primary variable)

Loan Terms and Amortization – Short payback periods, 15 years and under for best pricing (Primary variable)

Interest Rate – Rates should reflect 2% to 4% higher than what banks are charging for best pricing (Primary variable)

Balloon Payments – Balloons should be used to shorten payback periods but make sure credit is good on borrower first for best pricing (Primary variable)

Personal Guarantees from Decent-Credit Individuals – ONLY if the borrower is a corporation for best pricing (Primary variable)

Payment History and Seasoning of Loan – Make sure to collect payments that have 3rd-party records – no hand-written receipts EVER! (Primary variable)

Secondary variables:

Making Sure the Property has Current Homeowner’s Insurance – This is the responsibility of the new borrower /buyer to provide an Insurance Declaration Page  (Secondary Variable)

Purchasing Owners Title Insurance Coverage at the Time of Sale – Insurance that title on property is clean and clear – (Secondary Variable)

Using the Services of a Title Company to Close for File Cleanliness – This will always make a sale more streamline when as all documents and payments are in order – don’t cut corners here – (Secondary Variable)

As the seller, if you decide you want to get the benefits of offering a land contract without all the hassle of managing a long-term loan, you could consider selling a land contract to a direct buyer like Amerinote Xchange. When offering a property buyer to purchase real estate or land on contract, could be a very creative way that could allow the seller to take this asset to market for a quick exit strategy using a land contract buyer like Amerinote Xchange.

AX is the fastest growing land contract buyer in the country today, Unlike some of our competitors, we operate our own in-house funding platform, which means we require no outside approval or authorization to fund your deal when you go to sell a land contract. This translates into quick closings and fast payment when it comes to buying your residential or commercial land contract. 

When shopping for a land contract buyer, it is imperative that you work with a funding source that has the experience and know-how to get you your cash quickly and with as little friction as possible. In particular, we have the ability to fund privately-held land contracts, whether owner financed or institutionally-originated, in as little as 15 business days with no hassles and no commissions. Please review our Purchase Criteria and Land Contract Buying Process.

As one of the leading land contract buyers, we work with direct land contract holders and/or note brokers in all fifty states. If you need to find an experienced land contract buyer to buy your land contract or land contracts, we are ready to assist.  

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