[juliedoodlle]

Hello,

I'm in the midwest, have had a house on the market for nearly 2 years, started over priced, market dropped and we've been making house payments on two homes now for too long.

We now have two interested parties that want to buy our home but aren't in a position to get a loan. One family was flooded out of there home in a nearby town, and is waiting on a FEMA buy out. The other couple has a home a few hours away that they don't want to sell for another 8 months (it is not listed) because they need it until he/she is done with college. They love our house and want to buy it and keep the other one until May.

Sooo... what can we do? We're at 149,000 as the list price. We were thinking of asking for a land contract that is due in full 1 year from now... thinking that FEMA would finalize by then, or the other couple would have their house sold (optimistic).

I just don't know how much to ask for down. Plus how much per month? I understand the buyer needs to pay insurance but what about taxes? And the dumbest question of all. If they pay us 8000 down and 600 per month, does all of that get deducted from the 149,000 after the 1 year is up and that is what we close on?

Thank you!!

Julie

[Fr_Chuck]

Normally you will write up a contract where of course the down payment goes toward sell price, ( but is not refundable) if they don't or can't get a loan in one year they loose all of their money, *** many do it on a 3 to 5 year contact, I do all of mine on a 15 year contract so it is just paid off.

You take the balace after down payment and figure the payments with interest, 8 to 10 percent is not uncommom on contract for deeds.
So the monthly payment would be the actual payment of a loan, based with interest, based over either a 15 or 20 year loan but coming due in a limited amount of time that 1 to 3 year. So only the princial of the monthly payment goes toward the balance.

Also you want to keep your own insurance on the house, for the building, since if they let thiers laspe and it burns down, they walk away and you are out everything.

Taxes, what ever you want, I include est taxes into part of the monthly payment.

Also I would not want to do it short of about 15,000 down but at least your 8000 since it is easy to do 10,000 damages to a home in a year

[rockinmommy]

I pretty much agree with FrChuck.

Ask for 10% down and hope to get 5%. Where I live, owner carries are a standard 12% right now. So just use a mortgage calculator and figure what the payment needs to be. Charge whatever interest you're comfortable with. Call some other owner carries in the paper and ask what their interest rate is. Personally, I'd definitely include taxes and insurance in the payment. Don't take a chance on them not paying them.

I don't think I'd do it for $600 per month. At least not unless they put down at least a 10% or bigger down payment. A $150K house should rent for well over $1000 per month. If all they can afford is $600, then I doubt they can afford to buy the house.

You also need to decide what happens when a year comes and goes and they're not ready to buy the house. Are you going to foreclose on them? Or will you continue to carry the note.

I understand your situation, and it's not a bad idea. Just be prepared for hiccups along the way, and have in mind how you'll handle them. I would visit a real esate attorney and have them draw up the contract for you. This, in my opinion, is not a "do-it-yourself" kind of thing. Especially not for your first deal.

One other thing, as a landlord... I can tell you that the situation where the people have another house to sell, but aren't ready to sell yet... that usually doesn't work out very well. Not saying it could never work out. But I've had several tenants in that situation, and normally the first unexpected thing that comes along derails them and they fall behind on their payments. You know how hard it is to have 2 house payments. Most people can't keep that up for more than a couple of months without major problems.

Last. View whatever you do as a business transaction and make business decisions. I think you have a decent plan, but the statistcal chances of missed payments or total default is fairly high, so just be prepared how you're going to handle it when they try to make you feel like you're being MEAN and GREEDY.