When considering selling your property with creative seller financing such as a lease with the Option to buy, or a "Contract for Deed" (also known as a "Land Contract" you've really got to decide how much control you want to give the "end" tenant-buyer and/ or Buyer when you sell.
Attorney Bill Bronchick explains the differences in each of these types of contracts and what you should consider before selling in either fashion. Since I'm not an attorney, and I do not ever give out legal advice, I figured I'd let a real estate attorney like Bill Bronchick explain it all to you here in this video:
Keys Differences to Consider Before You Sell
In the last 7 years of working with home owners, wholesale real estate investors, landlords, property managers, and Realtors, I've noticed quite a bit of confusion between these two exit strategies, so the goal of this blog and the video above, is to help you understand the fundamentals of both before you enter into a contract.
- Usually you can safely collect 3-5% upfront (non-refundable) and if the "end" tenant-buyer fails to pay their rent on time (or at all), you can evict them.
- This is exit strategy is not considered a sale as the tenant-buyer has the "option" to buy and the "option" not to buy.
Contract for Deed:
- Usually you can ask for 10-20% down upfront (non-refundable), and if the end buyer fails to pay their mortgage, you'll need to foreclose on them.
- This exit strategy is considered a sale.
My name is...
Russell de la Peña, and I am a former Realtor with both Keller Williams Realty and Re/Max City Horizons out of Denver, CO. I'm originally from Los Angeles, CA, where I currently reside today, and I have authored a few books related to real estate investing and credit repair. I own a creative seller financing training school online and work with, and serve, new and seasoned real estate investors alike for a living.
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