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Why Choose Us As Your Land Contract Buyer?

We have been purchasing notes, mortgages and real estate contracts for over a decade and we pride ourselves on a unique client experience at the best price possible.

What is a land contract?

what is a land contractIn real estate, a land contract is a way to purchase real property without qualifying for a 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 if you live in a market where it is hard to find a buyer who qualifies for traditional financing.

How land contracts work

how do notes workTraditionally, a 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.

What to include in your land contract form

Buyers and sellers alike often wonder what they should include in a land contract form. Typically, the answer is any information that you might find in a standard mortgage note, including loan amounts and payment terms. In an effort to make creating your contract for deed easier, we’ve listed some important considerations for you.

  • Purchase Price: How much, in total, does the buyer need to pay to purchase the property?
  • Term of contract: How long will the contract between the two of you last?
  • Down payment amount: How much money will the buyer need to put upfront?
  • Loan balance: How much of the total sales price is being financed?
  • Payment amount and terms: How much will the buyer need to pay in each installment payment? How often will each payment occur? When should the first payment start and the last payment end? Will you require a balloon payment at some point?
  • Interest rate: What interest rate will the seller be charging?
  • Other payment considerations: Who’s responsible for paying property taxes and homeowner’s insurance? Who’s financially responsible for the maintenance and upkeep of the property?

What are the pros and cons of land contract homes?

Before you start looking at land contract homes for sale or considering offering this type of seller holding arrangement on your property, it’s a good idea to make sure that you’re fully aware of benefits and risks. To that end, we’ve laid them out for your review.

Pros and cons for the buyer

Buyer Pros

  • It’s a viable alternative to traditional bank financing: If you’re unable to qualify for traditional financing, land contracts may make it possible for you to become a homeowner.
  • You may face less closing costs: Since individual sellers don’t have the same overhead costs as mortgage lenders, you may be able to get away with paying less money upfront.

Buyer Cons 

  • Seller financing often comes at a cost: Usually, sellers will charge higher interest rates for the privilege of offering a non-traditional financing option.
  • You won’t be afforded the same protections: Traditional mortgage loans are highly regulated, unlike seller financing agreements.

Pros and cons for the seller

Seller Pros

  • You’ll have a bigger pool of potential buyers: Offering the option to create a land contract makes your home an option for more buyers, which can be a great thing in a down real estate market.
  • It’ll help you stand out from the competition: If there are multiple homes for sale in your area, offering a contract for deed option can help set you apart from the crowd.

Seller Cons

  • You won’t receive a big, lump sum payment: Unless, of course, you decide to sell your mortgage note to a qualified note buyer.
  • You’re on the hook if the buyer defaults: If the buyer decides to stop making their mortgage payment, you’ll be the one responsible for taking them through foreclosure proceedings.

Structuring The Land Contract

seller financing

If you want to make sure you get top dollar for your land contract when it comes time to sell, then make sure to structure your contract with an eventual buyer in mind.

Generally, land contract buyers want to see:

1. A decent-sized down payment (15 percent or more, ideally)

2. A low-average buyer credit score (over 600, but higher preferred)

3. A term of 10 years or less

4. Interest rates that are 3 to 6 percent higher than current market rates (within state usury laws)

5. Solid proof of repayment (they usually want at least one to five months of consistent payments via bank records)

6. Professionally prepared contracts and documents (created by an attorney or title company)

They also tend to steer clear or pay less for land contracts with interest-only and balloon-payment structures (with poor credit score buyers), so keep this in mind as you negotiate with your buyer. In the end, there are lots of land contract buyers you can choose from. Make sure you select one with experience and who will offer you a quick, competitive, and no-hassle quote.

Finding a buyer for your land sale contract

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 your mortgage note to a direct 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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