How to Sell a Land Contract
A land contract, or a contract for deed, is used when a seller is going to provide the financing in a real estate transaction. The buyer makes a predetermined number of payments to the seller while living in the home. When the final payment is made, often a balloon payment, the buyer takes full ownership of the home. A land contract is beneficial to buyer and seller because it allows someone who might not otherwise be able to get financing to have the ability to purchase the home. Complications arise when the seller wants to get her cash out of the land contract before the final payment. In that case, the seller has the option to sell the land contract to a third party that will then receive payments from the second party.
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Instructions
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Estimate the remaining payments you are set to receive. There is no set number that you will be offered for the rights to your land contract. Knowing this base number will help you in evaluating offers.
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Factor in inflation and interest. You will be receiving cash now, while the purchaser will be receiving the payments from your buyer. The company or individual buying your land contract will want to keep up with inflation as well as make similar profits on this real estate investment as they would in interest. These numbers are not exact but will give you a guideline of what to expect. The credit-worthiness of the buyer will also play a factor in how much you will be offered for your contract.
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Research reputable companies that purchase land contracts. Verify that the company you are working with has a valid business license. Check with the Better Business Bureau and your state licensing board. If possible, use a company that is referred to you by someone you know.
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Contact at least four companies. Getting multiple offers will allow you to compare the various deals and choose the best one. The companies making offers to purchase your land contract will ask for specific documentation. Each company may have different requirements. Keep copies of all correspondence with these companies.
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Accept an offer. Make sure the contract includes all pertinent information, including the dollar amounts, pertinent dates and property information. If possible, have an attorney review the contract. Both parties will sign the contract.
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Tips & Warnings
Notify the inhabitant that you are planning to sell the land contract to a third party. If his financial situation allows, he may want to purchase the land contract himself or find alternate financing, particularly if it means a discount to the buyer.
