anyone ever sell land on a land contract??

[schmalts]

I am selling my last property to pay for the new one i got last year. Everyone wants me to do a land contract so i decided i will look into it. Can anyone tell me any details? I know i basicly am the mortgage company on the deal but who usually pays the fees to set it up? what do i charge for iterest? do i contact a lawer or closing company to set it up?

 

[Calif. Hunter]

I'm not sure - this is the Missouri property? THere are land contract forms you can fill in, but you may have to get one from a title company. Basically, you agree to sell the land for a set price, at a set interest rate and the buyer pays you the agreed-upon payments. Upon payment in full, you execute a grant or warranty deed to the buyer and he gets fee title to the property. Until that time, you own the fee title while the buyer owns an equitable interest in the property. You need to cover all the bases (like who pays the property taxes, etc.) so an attorney or a very knowledgeable Realtor familiar with the laws and procedures in your area is your best bet. Ask the Realtor or attorney who customarily pays the settlement costs - in some areas, it is split, others are seller pay or buyer pay.

 

[Elkgunner]

Schmaltz,

Basically, everything is negotiable in this transaction. If the buyer/borrower were to go to his bank and get the mortgage, he would have to pay application fees, credit report, etc, etc.... There is no reason to agree to pay for the borrowing costs.

Look at it this way. There are 2 Scmaltz.

Schmaltz 1 is the Seller, Real Estate Barron, etc.. He bought a piece of land, he now wants to sell the land. How the financing happens does not matter to Schmaltz 1. He just wants to sell. Therefore, items like Property Tax, Insurance on the Property (if needed) will become the Buyer's responsiblility. (You might pro-rate the taxes if you paid them in advance or if they are due in arrears).

Schmaltz 2 is the Lender in this case. And as such, you need to protect the Bank of Schmaltz' interest in the property with filing the proper documents and such. You will also need to set the interest rate at what you want. Don't try too get too rich with the interst rate, as if it is bare land, you may not hold the note too long if it is going to be built upon. But in any event, make sure you get your lien recorded, then no further loans can get ahead of your loan in the queue. As to the rate, if you are asking $50k for the property, and somebody offers you $45K for the dirt and wants you to finance it, do it for $10k down and the balance at 10%. If they want a lower rate, agree to 6% but don't discount the property. All things considered, if you can get full asking price and offer the lower rate, you will likely be better off than a discounted selling price and a higher rate. Example: If I offer you $40k for the dirt and 15% interest rate, you may think you are getting a great deal on the sale 'cuz of the 15% intetest. Well, if 2 months after the deal, I re-sell the land for $50k (market value) and pay off the loan, you actually only got $40k and 15% interest for 2 months.

That may have been a long way of saying that you can use the interest rate as an incentive to get the sale closed, but not dropping the price. Also, make sure you get enough of a downpayment to cover all your costs of the sale, and any possible foreclosure. I would not think 10% down would be enough on bare dirt for the hassle of the sale.

Lastly, on the note, you need to find an Escrow company to manage the note. Many title companies have escrow services, and they will collect the payment for you and pass it on. They can even deduct the taxes and hold them for the County.

Go find you an attorney in the area of the land and you can work thru it. Or, if you want, go talk to somebody at the Title company and they will help you understand the whole picture, plus they might be able to suggest an attorney. Don't trust the Real Estate agents. I am not sure of the state you are discussing, but in Idaho it takes 2000 hours of training to become a barber, and 40 hours to become a real estate agent.... Think about it....

 

[schmalts]

Thanks guys. I think now i need them to tell me what kind of payments they can afford so thye can figure out how long they want to finance it. I told them i wanted 30% down.
Its not the AR property, thats gone already. this is the second half of the wisconsin land i had for 12 years. i am selling it on EBAY.. click here to view

 

[ELKCHSR]

Lastly, on the note, you need to find an Escrow company to manage the note. Many title companies have escrow services, and they will collect the payment for you and pass it on. They can even deduct the taxes and hold them for the County.

I have sold a little and the above quote is very very important, if the buyer is late the company will send out the notices and they also do all of the computations for early/late pay's with the ongoing interest, let you know if the tax's aren't being paid and take care of the yearly paper work for a very nominal fee.

There are three way's you can get these guy's paid, the buyer can be made to pay the fee which makes it impossible for you to get the escrow company fired if you don't like them and the buyer does.

you both can split the cost and then if either of you don't like the company can change them, or the way I like to do it is to just pay the fee, (usually around six to twelve bucks a month) and then you have full control of changing escrow companies if you don't like the services they are providing.

One more thing about having some one else do the paper work, there is an unobtrusive third party that makes sure the paper work is done right and you get a nice print out once a month/year of the exact transactions that are going on with this account.