Should You Sell On A Contract For Deed?

What is a contract for deed, and is it right for you as the seller of a home?

A contract for deed basically means that you, the seller, will be financing the buyer’s purchase of your home. Typically with a contract for deed there is a down payment and the contract runs for a certain number of years or monthly payments.At the conclusion, the buyer makes a balloon payment to the seller to pay off the mortgage.

During the contract for deed, the seller still owns the home and has to continue to pay the mortgage. The seller and buyer need to work out all the details such as who will pay the property taxes, homeowner’s insurance, and any necessary repairs.

Anyone entering into a contract for deed is strongly encouraged to work with an attorney or at a minimum, someone with a lot of experience in contract for deed transactions. A contract for deed can be a great opportunity for both sellers and buyers, but if not done correctly it can turn into a real nightmare which is why a professional should always be consulted.

As a seller, you still own the home and have the monthly mortgage payment on YOUR credit report. If you plan to buy another home during the contract for deed period, you will need to find out if you can qualify for another mortgage since you already have one or you will need to pay cash.

For more information, click here for a downloadable PDF.