Home buying is a complicated and often misunderstood process; but one that many people do not consider until they find out that the property on which they’re considering a purchase is under a predatory contract-for-deed. A contract for deed, or sometimes referred to as a “promise to buy,” is simply a promise that the owner of a property will sell the property if the buyer doesn’t fulfill his or her end of the bargain. The contract-for-deed generally spells out the type of deal that is being offered to the seller: sometimes it may be a “sale and rent back” deal; sometimes the seller may be given money up front in a lump sum; and sometimes the contract may simply require that the seller to leave the property and stay out of the sale. Regardless of whether or not the contract-for-deed is a pre-qualification to purchase, it’s an extremely powerful incentive for the seller to try to get a buyer to take on the responsibility of paying off the mortgage and any liens (such as back taxes) that may accrue by taking on the liability of a home loan. Feel free to visit their website at view more
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The reason why a contract-for-deed home buying is so attractive to sellers is because it allows them to reap the benefit of “underwriting” by being able to qualify for a low interest rate on their home loan without actually having to put the house on the market to seek a buyer. While the contract itself isn’t a guarantee that the seller will find a buyer to purchase his or her home, the promise of receiving a low interest rate on a loan is almost always enough to persuade most buyers to take advantage of it. But what if the seller doesn’t get the low interest rate he or she wants?
Even though the contract-for-deed is a legally binding agreement, it may not necessarily benefit the seller in the end. Some contract-for-deed agreements require that a certain percentage of the selling price of the home be paid upfront as a down payment. In these cases, the home buying process becomes one more form of flipping a home, where the buyer makes all of the payments right away and then looks to recoup some of the investment in property appreciation. If the buyer is unable to raise the necessary money in a timely manner or doesn’t qualify for the down payment, then the seller is at risk of losing his or her first investment. In this case, the seller might choose to foreclose on the home even if there are no buyers interested in taking advantage of the property, which could result in further financial hardships for the seller.