How to Purchase a Home on Contract

Purchasing a home entails establishing a contract with the seller of the home.

Purchasing a home on contract entails conducting a search for a home, negotiating the contract terms with the seller and taking steps to finance the home. Some home buyers enter into the usual real estate sales contract with the sellers and acquire ownership of the home when the purchase price is paid in full; alternatively, some potential home buyers acquire ownership of the home via an installment sales contract.

Instructions

1. Search listings for homes in your desired location and neighborhood. Consider what's important to you, such as the livability of the home and the relative distance to work or school. Become familiar with the property values in the area of the home. A licensed real estate agent can assist you with finding the best home that meets your goals.

2. Establish the course of action that you will undertake to purchase the home. There are different methods of purchasing a home by way of a contract. The basic real estate sales contract establishes the seller's price and stipulations in regards to purchasing the home, as well as the seller's intent to sell the home and the buyer's intent to purchase the home for a specified price. Additionally, a buyer may purchase a home via an installment land contract. Installment land contracts are conditional sales contracts, whereby the buyer makes monthly installment payments on the home until the purchase price is paid in full. At that time, the buyer takes full ownership of the home.

3. Negotiate the terms of the contract with the seller. Get a clear understanding of the seller's intent in regards to the sale of the home. Hiring a real estate attorney can help you understand the contract terms and make an informed decision before agreeing to contract with the seller to purchase the home.

4. Secure financing unless paying the seller directly. Many buyers acquire mortgages from a mortgage lender to finance the purchase price of the home. Alternatively, if you and the seller have agreed to enter into an installment land contract, you will more than likely be required to make a down payment towards the total price. Afterward, the terms of an installment land contract will permit you to take possession of the home while paying the monthly installments towards the purchase price.

References

• American Bar Association: Buying or Selling a Home

Resources

• Bankrate: New Short Sale Rules Impact Buyers