If you have a house you want to sell but cannot find a buyer for it, you may run across a person that would like to buy your house on contract. Selling a house on contract can be a great opportunity for a homeowner, but it also has some risks attached to it. Here are three of the risks you may have if you decide to go through with this.
The buyer may fail to make the payments
When a person wants to buy a house on contract, it is usually because the person has the following two characteristics:
Because of this, you are taking a risk with selling your house on contract, and the main risk is that the buyer may fail to make the payments agreed upon in the contract. To reduce your risks in the deal, you will need to make sure you get a decent down payment, and you should put this in the bank in case you need it.
During the contract deal, you must keep the loan on the house and make the payments each month, regardless of if the buyer pays you for them. With the money from the down payment, you would at least have a way to continue making the payments if the buyer fails to pay you.
The buyer may damage the house
The second risk you assume with a deal like this is damage the buyer may do to the house. The house will technically still be your house while the contract is in place. If the buyer does not properly care for the house and fails to make payments to you, you might end up having to foreclose on the house. If this happens, you may need to invest some money into the house to make the necessary repairs before you can sell it to someone else.
You may have problems getting another loan
Because you will be required to keep the loan in your name for this house, you may encounter problems getting a loan to buy another house to live in. If this occurs, you may be stuck renting a house during the contract deal. This is something you should evaluate and look into before agreeing to sell your house on contract.
If you want to go through with a contract deal like this, you must visit a real estate attorney first. The attorney can help you prepare a contract for the deal, and the attorney can help you fully understand your risks in the transaction. You can contact a law office, such as McKone & Unruh, to learn more about the costs for this type of service.
Share4 April 2017
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