Typically when you offer owner financing you sell above market price. Not that you have to, you just make more money that way. Will the house cash flow at $800 a month? I would sit down with the young couple to determine what caused the bad credit. to insure that it will not happen again. Then I would try to determine if they would increase their income in a year or two so that they could qualify for a 95K loan. A land contract with a balloon in the future has about the same effect as a lease option. The main difference is how the laws in your state look at them if it doesn?t work out. If you have not done it before then it is best to have your lawyer prepare the contract or review one you acquire.
Will you owner finance me with a sales price of 95K with 4K down at $800/mo? If you say yes I?ll fax you the contract tomorrow.
How Do We Contract for Sale? - Posted by Denice S.
Posted by Denice S. on November 24, 1998 at 10:58:42:
Hi, Folks,
We now seek advice as sellers - always thankful for advice given to us as buyers!
We would like to sell our home to a young couple with a bad credit rating. (Listed the house as owner financing avail.) They have 4,000 to bring up front and can pay $800/mo. (we pay taxes & ins.). House is listed for 95K, appraises at 110K. Mortgage balance is 81K.
Should we sell using istallment land contract or stick to Lease/Option purchase contract? Are there any sites avail. which would let us download a sample land contract? Any info. out there on non-refundable option consideration? Can this be done without a lawyer?
Re: How Do We Contract for Sale? - Posted by John Katitus
Posted by John Katitus on November 25, 1998 at 02:40:48:
It’s hard to tell if you’re stuck on these people or want to sell your house. If it’s the people, you are sure giving them a great deal. If it’s selling, I would go a Lease/Option with a a 119.9 sale price, 895 rent with 5% annual increase, 6000 deposit, two year option. You can always give somewhere if you want.
Either way I would vote Lease/Option. Use two separate documents. They’re widely available. I can provide if you want. This way there are no closing costs (don’t record the contract) and you can more easily get them out if you need to.