To quote The Language of Real Estate, "The contract for deed is used quite extensively in many areas, where it may be called a land contract, agreement of sale, installment contract, articles of agreement, conditional sales contract, bond for deed or real estate contract. In a dynamic and rapidly appreciating real estate market, the contract for deed enable buyers to purchase property on reasonable financial terms and thereby benefit from the appreciation of the property values. Many buyers then sell the property at a profit before their final payment becomes due. In a tight money market where it is difficult ot qualify prospective buyers for conventional financing, the contract for deed is frequently the best method to sell or purchase a property. Especially benefited by the contract for deed are young couples, who would have difficulty qualifying for a bank loan at the time of entering into the contract for deed, but whose incomes will increase before maturity of the agreement, enabling them to refinance and pay off the contract for deed.
A Lease to Purchase to basically a Lease Option to purchase. Lessor/optionor must be careful to structure the transaction so that the IRS does not characterize the deal as a sale, rather than a lease.
The two basically accomplish the same thing - purchase of the property - but with each, there are some important items that must be addressed in the contract or lease agreement. You would be wise to consult with an attorney, particularly if the transaction is a more complicated one.
Real Estate Professional / Prestige Realty
Bianca Bennett / 602-570-7898
The new regulations were built for the 2,300 page Dodd-Frank law and as of July 13, 2013 there is 155 new regulations comprised of 11,000 plus pages. The large banks have had to hire additional personnel to handle the additional administrative processes and requirements of a loan. Small commercial banks and credit union are going to be hard pressed to follow suit because of the expense. A person selling their residential real estate will assume the same processes and the same risk. Few if any will be able to assume that risk. The cost of a loan will most likely be higher and most likely take longer to process. You could probably expect a minimum of 45 days to close a bank loan.
If you're going to attempt a seller financed transaction you need to try and get that closed before the 1st of the year.
Jeff Daley, PhD
Luxury Valley Homes
Licensed REALTOR(R) State of AZ
The Tenant/buyer pays to the landlord/Seller a NONREFUNDALBE option deposit that is applied to the purchase price of the home. The Tenant/Buyer then pays to the Landlord/Seller rent to compenstate the Landlord/Seller for the Tenant/Buyer's use of the property. Rent paymens are USUALLY made on a monthly basis. Some time portions of that monthly payment is applied to the purchase price and or the down payment of the home. DURING THE TERM OF THE LEASE, But BEFORE the option expires, the Tenant/Buyer has exclusive right to buy the home under the terms to which the parties agreed to previously.