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    REALGEMGAL's Avatar
    REALGEMGAL Posts: 2, Reputation: 1
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    #1

    Dec 7, 2007, 01:55 PM
    Contract for Deed
    I have a Hobbie Farm for Sale, and I have a buyer that would like to do a Contract for Deed. The home must sell for least amount of $269,900.00, I have it on the market for $279,900.00--and have dropped it 3x now.
    The family who wants it is willing to Rent for a year for $800.00 and put down $5,000.00.
    My mortgage on the home is $1,600. A month. I am willing to eat this as long as I can lock them into the property with the Contract--The home is in Minnesota.
    How should I write it up? I have never done this before...
    Please help! Thanks!

    Kristine
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #2

    Dec 7, 2007, 02:02 PM
    Get a real estate attorney to draw up the contract for you.
    REALGEMGAL's Avatar
    REALGEMGAL Posts: 2, Reputation: 1
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    #3

    Dec 7, 2007, 02:07 PM
    Well, that is an easy answer... However, I guess I should have asked a Realtor. I can draw it up myself, I just wanted to understand the financing end of it...
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #4

    Dec 7, 2007, 02:10 PM
    What about it? You said they will put $5K down and pay $800/mth for the first year. What's complicated about that? You need to put in some clauses about late pmts and defaulting. What happens after the year? Do they have to obtain their own financing or what?
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #5

    Dec 7, 2007, 06:08 PM
    Make sure that 5000 is not considered a deposit, but a down payment and also considered ernest money, so at the end of one year if they don't buy it, they don't get the 5000 back.

    Also if they can't pay 1600 a month now, how do they plan on paying 1600 a month latter.

    Why can't they get a loan now ? How bad is their creidt, have you ran it.

    This is not a real contract for deed, but it is a lease with option to buy from the way you explained it,

    A contract for deed would be where they paid you so much a month for so many years, at the end of that time you give them a clear deed.

    You are not finianceing anything if you are merely renting it to them, and no deed would transfer, since you can not transfer ownership till you pay off your mortgage on the property.

    I would say if you made the rent 1600, and applied the 5000 toward rent, then allowed a credit of the rent toward purchase if they buy it at the end of one year.
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