Understanding Land Contract
了解土地合同
Typically, residential real estate transactions are thought of in one way: a buyer and a seller work through a realtor and a bank or mortgage broker to complete a sale with a single transaction and a one-time payment to the seller. But there is another non-traditional option for the sale of real estate that is becoming more common every day: it's called a Land Contract. (It's sometimes called a "Contract for Deed" as well.)
A Land Contract allows the owner of a property to sell that property to a buyer over the course of time, financing the purchase price on behalf of the buyer and collecting interest on the sale amount. The buyer does not need to go out and find a mortgage from a bank or mortgage company, nor does the buyer have to pay the entire purchase price to the seller upfront. Rather, the buyer signs a Land Contract with the seller agreeing to purchase the property in either installment payments or in installment payments with a balloon payment on a certain date. The buyer then moves into the property and makes the agreed upon monthly payments. When all of the payments (and any required balloon payments) are made according to the terms of the Land Contract, only then does the buyer finally take title of the property from the seller.
A Land Contract gives a buyer who may have a difficult time finding bank financing due to credit problems or non-traditional income sources the opportunity to purchase a home. It's a great way for a buyer to break free from "rent payments" and build equity in a property.
A Land Contract allows the owner of a property to sell that property to a buyer over the course of time, financing the purchase price on behalf of the buyer and collecting interest on the sale amount. The buyer does not need to go out and find a mortgage from a bank or mortgage company, nor does the buyer have to pay the entire purchase price to the seller upfront. Rather, the buyer signs a Land Contract with the seller agreeing to purchase the property in either installment payments or in installment payments with a balloon payment on a certain date. The buyer then moves into the property and makes the agreed upon monthly payments. When all of the payments (and any required balloon payments) are made according to the terms of the Land Contract, only then does the buyer finally take title of the property from the seller.
A Land Contract gives a buyer who may have a difficult time finding bank financing due to credit problems or non-traditional income sources the opportunity to purchase a home. It's a great way for a buyer to break free from "rent payments" and build equity in a property.
Remember, new properties become available for sale every day, so don't be discouraged if you don't find what you are looking for immediately.
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