#1 makes sense. #2 has too many risks, IMHO. Long story short, we met with the realtor last night and the whole thing was really sketchy. The potential buyer has plenty of cash, but just finished a divorce that has her holding the paper on a condo. She wants to sell the condo to her Mom, who is currently living there and making the payments, but until it is free an clear she won't qualify for a mortgage large enough for a home such as ours.
The comment by her realtor (who has purportedly "done this" before) that really made the red flags shoot up was, "You don't have to record the deed so your mortgage company doesn't know about it." We immediately ended the conversation at that point and showed her the door. Certainly some ethical issues there. Thanks for the info everyone. It has been quite helpful. I need to check our mortgage to see if we have a due on sale clause - knowing our mortgage holder I am betting it's there. Dan --- On Wed, 12/29/10, Dieselhead <126die...@gmail.com> wrote: > From: Dieselhead <126die...@gmail.com> > Subject: Re: [MBZ] Selling on Contract/Lease to Buy? > To: "Mercedes Discussion List" <mercedes@okiebenz.com> > Date: Wednesday, December 29, 2010, 8:18 PM > There are two major ways to do this > 1. Contract for deed: You hold the deed, no > wasted time/money for foreclosure. You also have > contingent liability as the landowner. > > 2. Contract sale/escrow Title is transferred on > possession, but held in escrow at an institution until the > terms of the contract are fulfilled. No liability, BUT > if the buyer defaults, you have to foreclose. > Foreclosure is regulated by state (and maybe fed) law. Best > to know all about it before choosing this route. In > essence, you hold the paper. > > A variation on #2 is if the buyer allows you to hold the > deed rather than an escrow agent. > > It can be done with terms you dictate. Zero down, > 10%, 20%, 30% or 50%down or whatever you are comfortable > with. > > I am selling a building with 20% down. 7% interest, 3 year > contract > > I hired a shyster to bless the paperwork. He carries > E&O insurance. I don't > > > > I looked into it a few months ago. I'd suggest > consulting with a real-estate attorney, but the gist of it > is that the buyer gives you a small or no down-payment, and > starts making payments on a standard amortization (principal > and interest) schedule. If they default, you evict > them and keep the payments they have made as rent. Otherwise > the idea is that at some point they refinance into a > conventional mortgage, and whatever principal they have > already paid to you reduces the amount they need to > finance. > > > > You would normally write the contract with a balloon > payment after 3 - 5 years, so that you can get your equity > out by some known date. Contract sales are a legitimate way > to buy/sell real-estate, but I'd be inclined to have a > lawyer set it up. It should be mostly boilerplate for > a real-estate lawyer and not too expensive. > > > > If you yourself have a mortgage on the property, it > gets more complicated. On almost all mortgages, a > contract sale will trigger the "due-on-sale" clause, meaning > the mortgage holder *could* call your mortgage. They > might not, and probably wouldn't if the loan is in good > standing and the rate is at or above the current prevailing > rate. But you have that sword of damocles hanging over > you. > > > > Allan > > > > > > > > On Wed, 29 Dec 2010 11:44 -0800, "LWB250" <lwb...@yahoo.com> > wrote: > >> Anyone here have any experience with this > sort of real estate > >> transaction? > >> > >> I ask because we have had a couple of > potential buyers ask us about these > >> means, and so far we have dismissed them, as > we don't want to be stuck > >> with the house over time - we want an > outright sale so we can get our > >> equity and move on and purchase another > home. Things being what they > >> are, this might be an alternative means of > getting someone on the hook > >> and ourselves out from under the place. > >> > >> I would be curious to hear any pros/cons of > going this route. I can't > >> see anything positive about it myself, but I > am not familiar with either > >> method of sale, so I figure I need to do > some homework. > >> > >> Dan > >> > >> > >> > >> _______________________________________ > >> http://www.okiebenz.com > >> For new and used parts go to > www.okiebenz.com > >> To search list archives http://www.okiebenz.com/archive/ > >> > >> To Unsubscribe or change delivery options go > to: > >> http://okiebenz.com/mailman/listinfo/mercedes_okiebenz.com > >> > > > > _______________________________________ > > http://www.okiebenz.com > > For new and used parts go to www.okiebenz.com > > To search list archives http://www.okiebenz.com/archive/ > > > > To Unsubscribe or change delivery options go to: > > http://okiebenz.com/mailman/listinfo/mercedes_okiebenz.com > > > _______________________________________ > http://www.okiebenz.com > For new and used parts go to www.okiebenz.com > To search list archives http://www.okiebenz.com/archive/ > > To Unsubscribe or change delivery options go to: > http://okiebenz.com/mailman/listinfo/mercedes_okiebenz.com > _______________________________________ http://www.okiebenz.com For new and used parts go to www.okiebenz.com To search list archives http://www.okiebenz.com/archive/ To Unsubscribe or change delivery options go to: http://okiebenz.com/mailman/listinfo/mercedes_okiebenz.com
