Also known as a Land Contract or a contract for deed, is an installment payment agreement between a buyer and a seller in which the seller, instead of a bank, finances the purchase of a piece of real estate.
For all practical purposes, the buyer owns the property and has the right of :
Use of the property
Benefits to the Buyer:
No underwriter qualifying, although the seller could ask for a copy of the buyer's credit report.
Down Payment amount is negotiable.
Length of contract term, interest rate and payments are negotiable.
Low closing costs, there are no lender fees to pay.
Benefits to the seller:
Typically higher sales price.
Often a better rate of return than money market account.
A difference between a mortgage and a land contract is that the deed transfers to the buyer right away when buying with a mortgage.
With a land contract the deed does not transfer until all the payments have been made.