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lindaH2O · Jun 27, 2009, 05:06 PM

I have people renting my house in Missouri who want to buy it, but don't have the money to put down on it. I would like to know everything I need to know about doing a contract for deed.

ScottGem · Jun 27, 2009, 05:13 PM

Go to a Real Estate attorney and have them draw up a contract for the renters.

If they don't have the money for a down payment, then I would recommend a contract with a 5 year balloon. This means that the contract has a term of 5 years. During which they make monthly payments. At the end of the 5 years, then pay the balance due. In 5 years, they should be able to get financing for the balance since they will be considered to have equity.

There are lots of threads here about contract for deed sales. You can browse through to find more info.

sheading · Jul 3, 2009, 01:59 PM

Go online... get a contract for deed packet for the state of Missouri. Enter your specific terms... such as 2 year owner financing @ interest rate stated in your existing note. Then mandatory refi to cash out your balance within the two years. On either your full purchase price balance or the price balance of what ever you are charging for the sale of the house.
If they have not so good credit now... hook them up with a credit repair service that will guarantee that in 2 years their credit will be good enough to roll the loan. That way you will get what you want for the property witout sacrificing your equity value. When you do a Contract for Deed the buyer goes to closing on the house and the documents are filed in their name at the county court house with buyer and sellers name on them and tecnically the buyer owns the house, if they default you get it back. This puts the existing mortgage company in the first lien holder position and you in the second lien holder position for any monies above and beyond the mortgage balance... ( i.e. your equity)

ScottGem · Jul 3, 2009, 03:08 PM

Originally Posted by sheading

and tecnically the buyer owns the house,

I disagree. In most contract for deeds that I have seen the seller retains title to the property and its not turned over until the contract terms are satisfied.

Yes, the contract may be registered to formalized the buyer's interest. But if the buyer defaults, the contract reverts to a rental contract.

Fr_Chuck · Jul 3, 2009, 07:40 PM

Deeds are not transferred with contracts for deeds, If it is transferred it is owner financed not contract for deed.

I will slightly disagree with all of them, If the people have no money, can not give you a down payment I would leave it at a lease to own with higher payment with some going toward the home.