if a property says "land contract available", what exactly does that mean?

Asked by Terri Schmitt, Michigan Wed Apr 18, 2012

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Kathy Persha, Agent, Birmingham, MI
Wed Apr 18, 2012
It means that the seller of the property is offering seller financing. A land contract is a legal agreement between the buyer and seller where the seller holds the title of the property until all the terms of the land contract have been met. Usually there is an agreed upon sale price, length of time the contract is in effect, a stated interest rate, stated monthly payments, etc. The terms of the land contract are what the buyer and seller agree on. Normally land contracts will expire in 2-5 years and the buyer would be expected to get a mortgage at that time to pay the seller off. The advantage of a land contract is that it gives a buyer who does not qualify for a mortgage time to repair his/her credit so that they can get a mortgage within the timeframe of the land contract. The advantage to the seller is that it opens up a much larger buyer pool since there are so many people with credit issues now due to the foreclosure crisis who need time before they will be able to get a mortgage again.

Kathy Persha
Keller WIlliams Realty

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