How to Buy a House Contract for Deed
A contract for deed is an agreement entered into between the buyer and seller of real estate. The seller provides financing for the sale. This is accomplished by the parties agreeing to a sales price. The buyer makes installment payments until the total purchase price is reached.
During the process of paying off the contract for deed the purchaser maintains possession of the premises. However, title to the real estate is not transferred to the buyer until the total purchase price is paid.
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Instructions
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Negotiate and enter into a contract for sale. A contract for sale is utilized in cases in which the transaction will be consummated with either a home mortgage loan or a contract for deed.
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Place a down payment on the property. In most cases involving a contract for deed, the buyer can negotiate a down payment that is minimal (equal to two or three percent of the overall purchase price).
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Make monthly installment payments as called for within the contract for deed.
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Undertake preparations for the ultimate balloon payment. Most contracts for deed call for the buyer to make an ultimate balloon payment after a specified period of time. In many cases, a buyer will seek financing for this balloon payment.
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Obtain a transfer of the title into your name after you have completed the payment process (whether that includes all installment payments or an ultimate balloon).
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Tips & Warnings
Pay close attention to the terms and conditions of the contract for deed. You need to understand that if you default on the contract you will not be entitled to any sort of refund for installment payments made, nor do you have any ownership interest in the real estate before all payment are made. The only interest you have during the payment process is to possession of the property.
