Archive for the ‘Land Contract/Seller Financing’ Category

Will They Sell on Land Contract?

Would YOU give title to a 6 figure asset to someone with your credit history?

I don’t mean to sound snarky, but I probably get 2-3 inquiries a week asking about land contract terms. The call usually goes something like this:

Caller: Will the seller at X address consider land contract terms?

Me: How much downpayment do you have and how long of a term are you looking at?

Caller will usually have somewhere between 2 payments to 10% on the high side.

Me: Why don’t you want to get a mortgage?

Caller will usually not qualify for a mortgage because of a recent foreclosure, short sale and/or bankruptcy

So…. If you fit the scenario above: Would YOU give title to your house to someone who has a few thousand dollars and bad credit?

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Jackie Hawley
Keller Williams Realty Clarkston

Cell: (248)736-6407



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If You’re Short on Cash Don’t Ask About Buying a Lake Orion or Oxford Home on Land Contract

I probably get 2 or 3 calls or emails per week asking about buying a home in Lake Orion or Oxford MI on land contract. Often times these callers want land contract terms because they are unable to get a mortgage for the next few years. Many of these prospects had a financial setback of some kind- like many who live in Michigan- and have lost their homes and killed their credit. Again, this is not unusual these past few years and I am not passing judgment on anybody. These people are used to being homeowners; I sell real estate and I LOVE people who want to be homeowners. But because so many people have been losing their homes in North Oakland County MI and Lapeer County MI there is a ton of mis-information and quick fixes all over the Internet, TV, newspapers…

On the surface a land contract seems like the perfect situation for both buyer with bad credit and seller in a market that has experienced declining value. But let’s dig a little deeper.

From the seller perspective:

  • You have bad credit or you would be getting a mortgage
  • They would be giving you title to their house
  • If they currently have a mortgage they are probably depending on you and your bad credit to make your payments on time so they can make their payments

For that risk the seller will usually want a substantial down payment and a higher interest rate than you would pay a bank. You may also pay a bit higher than fair market value for the house. Part of your spanking for having bad credit. And compensation to the seller for taking a risk.

From the buyer view there are also risks you need to consider:

  • If you can’t get a mortgage at the end of the land contract term you may be out your down payment and principle payments
  • If the seller has a mortgage on the house and lets the house go into foreclosure you will be SOL and lose your down payment and principle payments along with any cash you put into the place
  • There is a real lack of choice if you are limited to sellers offering land contract terms

As of today there are 17 homes in the Lake Orion and Oxford school districts offering land contract terms. The range in asking price from $174,900- $4,200,000. The smallest down payment offered is $20,000 and the most common interest rate asked for is 6%.

I am not saying that land contract terms are never in the best interest of both a seller and buyer. I will write another post in the next day or two covering when a land contract is in the best interest of all involved. The point of this post is to address the misconception that many have that a land contract is cheap way to get into a house while you repair your credit.

Jackie Hawley
Keller Williams Realty
cell: (248)736-6407
email: Jackie@JackieHawley.com

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