Why A Land Contract Is An Intelligent Way To Sell Property

Jim Hart

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There are many things that will dictate whether you should consider selling your property on a land contract. The quality and desirability of the property, the quality of the market, the number of sellers the market, consumer demand in your area and your motivation to sell the property. If you are motivated seller competing to sell your home, you may want to consider selling on a land contract. There are a few benefits as follows:

1. If you sell for sale by owner and offer a land contract, you eliminate real estate commissions and increase the number of prospects who will be interested in purchasing your property.

2. Selling on a land contract provides a way for you to receive a steady income stream over the life of the land contract. In this way, you have both the benefit of ultimate ownership until the contract is satisfied and the income stream like a rental property.

3. Many times people buy property on a land contract will invest money to improve the property such as new windows, carpeting and other improvements that increase the value of the property during the land contract.

4. The buyers will be responsible for good husbandry of the property during the period of the land contract and will pay for all maintenance including catastrophic repairs like HVAC and roof repairs. Again, increasing the value of the home during the land contract.

5. In the event that a buyer defaults on the land contract for any reason within their control or outside their control, you can take the property back, often with substantial increase in value because of improvements made during the land contract.

6. You should consult your account or lawyer, but you should be able to avoid or minimize capital gains tax because you are receiving payment streams and not a one time lump some payment.

7. You can have your attorney draft a land contract specifically tailored to the want s and needs of the buyer and yourself for the short, medium and/or long term. For example, as a seller, you may want to defer being cashed out of the property for 5 or 10 years and can structure such a deal with the buyer securing a balloon loan, say, in the 5th year.

Land contract selling is not for everyone but it is a good alternative to keep in mind to expand the possibilities of selling.

To your success!

Copyright © 2006 James W. Hart, IV All Rights Reserved

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