You sold a property on a land contract and still hold the deed while the buyer pays you. We take the contract to competing buyers and show how each offer was priced.
What pulls the price down before the payer is even considered.
The same worksheet comes with every offer.
| Remaining balance | $129,400 |
|---|---|
| Payments left | 168 |
| Buyer’s target yield | 8.0% |
| Purchase price | $115,000 |
| Discount from balance | 11.1% |
| Our fee | shown on every offer |
| Sell the whole note | Sell 60 payments | Keep it | |
|---|---|---|---|
| Cash today | $115,000 | $56,200 | $0 |
| Payments still coming to you | None | 108 payments of $1,140 | 168 payments of $1,140 |
| Total you receive | $115,000 | $179,320 | $191,520 |
| What you give up | Every future payment | The next five years | A lump sum now |
Illustrative example. Totals add up the payments as scheduled; they assume the payer keeps paying and are not adjusted for the value of money over time.
Signed land contractYour deed to the propertyPayment history or ledgerProof of taxes and insuranceA land contract sells property in installments. The buyer moves in, pays you every month and takes on the taxes, insurance and upkeep, while you keep the deed. When the last payment is made, you sign the deed over.
The name depends on where you are: contract for deed, installment land contract, agreement for deed, bond for deed. If you hold one document that sets out both the price and the payment schedule, and the property is still in your name at the county, then a land contract is probably what you have.
With a mortgage, the borrower owns the property and you hold a lien. A land contract reverses that. You are still the owner on record, and your payer holds the right to become the owner once they finish paying.
So a sale transfers more than the payments. The buyer of your contract takes an assignment of the contract, which gives them the right to collect, and in nearly every case a deed to the property as well, because whoever collects has to be able to deliver title to your payer at the end. Your payer’s price, rate, payment and final date stay exactly as written.
A buyer first asks whether the contract was recorded. A contract signed at a kitchen table and never filed with the county can still be sold, but a buyer has less proof of who holds what. Recording the contract, or a short memorandum of it, removes that doubt.
Next comes your own title. Because the deed is in your name, anything attached to you can attach to the property: a judgment, a tax lien, an old loan you never paid off. A title search will find these. If you still owe a bank on the property, that loan sits ahead of the contract and has to be dealt with at closing.
Last is how default works where the property sits. Some states let a seller cancel a land contract through a process called forfeiture. Others generally require a foreclosure, particularly once the payer has built up equity. A buyer who expects the slower, costlier route wants a higher return on their money and pays less. The rules differ a great deal from state to state, so check yours with a local attorney.
A home-drafted contract can leave out the interest rate, the late fee, or what happens to taxes and insurance, and a buyer has to price every gap as a risk. Read yours for these, and for a clause that limits assignment or requires the payer’s consent to one.
Check the tax position too. On a land contract the tax bill may still come to you, even though the payer is meant to pay it, and an unpaid bill will show up in the buyer’s review.
None of these gaps has to be closed before you ask what the contract is worth. Tell us about your contract, say at the start whether it was recorded, and name the gaps you found, so the price that comes back already allows for them.
A buyer’s review runs on these:
From there the pricing logic is the same as for the other note types: the buyer’s return, the equity and the payment history. One question is particular to this paper. Because the deed moves with the contract, selling only part of a land contract depends on how title is held while the buyer collects their share, so have that set down in writing before you agree to a partial.
Yes, in everyday use. Contract for deed, installment land contract and agreement for deed all describe a sale where the buyer pays over time and the seller keeps the deed until the end. The name used tends to depend on the state.
Usually, yes. The buyer of your contract has to be able to deliver title to your payer once the contract is paid off, so they normally take a deed from you along with the assignment of the contract. Your payer's rights under the contract carry over unchanged.
Often you can. A buyer will want it recorded, or a memorandum of it recorded, before or at closing, and will want a title search on the property. An unrecorded contract tends to draw fewer bids.
In most cases, yes. A buyer can purchase a set number of payments and return the contract to you afterwards. The paperwork is a little different because the deed is involved, so the agreement needs to say who holds title during the partial.