contract vs mortgage - Posted by Bert G

Posted by Irwin on May 13, 1999 at 19:27:48:

Most sellers don’t want to give a deed to their property until they get paid in full. They don’t understand carrying back a mortgage and they get scared when their lawyer tells them that if the buyer doesn’t pay, they have to foreclose to get their property back. When a land contract is explained to them, the fear disappears, even though in many jurisdictions, where the buyer has equity built up, a seller also has to foreclose upon default. So for all practical purposes they are not that much different. As a buyer I always prefer the deed and mortgage. As a seller, I give, at most,a land contract (with small down payments, it’s a lease/option). You needn’t let the form of the financing stand in the way of making a good deal for yourself. Just be sure to have your lawyer review title, and the contracts for you. Don’t rely on your Realtor to do it.

contract vs mortgage - Posted by Bert G

Posted by Bert G on May 13, 1999 at 17:37:39:

Here in North-by-gawd Dakota, just about eveyone understands contract-for-deed (land contract). Hardly anybody seems to have experience with seller carryback mortgages.

Looked at a 6-plex today with below-market rents and a motivatd seller. He’s in California and has his 21 year old daughter mis-managing the place. Realtor says he’d be real amenable to selling on contract.

Here’s my basic question: What are the pro’s and cons of contract vs seller mortgage from both the seller’s and buyer’s perspective? I’m under the impression that a mortgage is better for the buyer, because you get title right away rather than when its paid off, plus there’s no risk of the seller welshing. Contract is better for the seller because in case of default, they don’t have to go thru foreclosure. If thats basically correct, what could I do to convince the seller to hold a mortgage, and explain it in a way that will survive being filtered thru two realtors?


Bert G