Contract for Deed: Good for Buyer and Seller!

I attended a contract for deed continuing education class today which made me realize what a great blog topic CD's would be.

You may be asking what a contract for deed is exactly? In short, a contract for deed is a type of seller financing. Buyer and seller would agree on a sale price and would negotiate the rest of the financing terms including the down payment, interest rate, term, etc. The seller would then accept payments directly from the buyer over the course of the agreed upon term in lieu of receiving the entire sale price at closing.

So when would a contract for deed be a good option?

Although interest rates are phenomenal right now and there are great financing options available, there are some situations where a buyer does not qualify for traditional financing. Maybe the buyer has no credit or they had a few bumps in the road but have since shored them up. The buyer could have plenty of cash flow or reserves to purchase a home now but do not start their new job until a later date and because of that do not qualify for a loan right now.

Sellers have a great opportunity to open up their home to an entire new pool of buyers who may not be able to qualify to purchase a home otherwise. A seller may not have plans for the proceeds of the sale of their home and by offering a CD they may see the return on their investment dollars as a far superior one to other investment options they may have for their money. A contract for deed can also provide a seller with monthly income or cash flow while they hold the contract.

A contract for deed can be a creative way to get a buyer and seller who might otherwise not meet get together to form a relationship that might just be made in real estate heaven!

If you have questions on whether a contract for deed may be right for your situation, give me a call or shoot me an email.

Have a great week!