Contract For Deed Homes


Contract for deed has lots of advantages as well as disadvantages both to buyers and sellers. Depending on a situation that you are in, contract for deed may not always be the best route to take so you should always seek legal advice to make sure C4D is the right option for you.

Each home buyer has their own reasons to why contract for deed financing benefits them in the situation they are in. Most of the time lack of credit, past financial problems (foreclosure, illness/medical bills, divorce, job loss, bankruptcy, etc) or self-employment prevents potential home buyers from obtaining a home loan. This leaves contract for deed as one of the very few options available to be able buy a home in MN.

Benefits for Buyer

  • No need to qualify for FHA or conventional
  • Ability to buy a home sooner
  • Start building equity early
  • Less paperwork
  • Quicker and simpler transaction
  • Ability to negotiate terms and conditions of the contract
  • Tax deductible interest and property taxes
  • Ability to homestead your home
  • It is easier to get qualified for a refinance than a home purchase later on
  • No more rent payments and no more landlords
  • No PMI
  • Doesn’t hit credit report in the event of default
  • Late payments do not get reported to credit bureaus

Benefits for Seller

Sellers have different reasons why contract for deed offer makes more sense for them. Some like the idea of earning interest and others treat it as an investment better than a stock market.

In a seller’s market, contract for deed is very rare because homes sell fast and for top dollar but in a buyers market, seller might not have a lot of options. Offering contract for deed terms caters to a wider pool of buyers which can help get a better price for the home. Here are some of the benefits that seller gains when selling a home on a contract for deed.

  • More potential buyers
  • Higher sale price
  • Investment that offers higher interest that a savings account
  • Sometimes can be a safer investment than stock market
  • No tenants turnover
  • No termites, leaky pipes and midnight phone calls from tenants
  • No rental license required
  • Get 10-20% before a buyer moves is
  • Steady cash flow
  • Possible tax benefits
  • Easier to sell especially in a buyer’s market

Whatever seller’s reasoning may be, it is also not always the best option and it is highly recommended to seek legal advice at all times.

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