Many Indiana note holders sold a modest house on a land contract or a mortgage and have collected payments for years. We shop that paper to competing buyers and show the math behind every offer.
Patterns we would expect in Indiana files.
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.
The promissory noteThe mortgage or deed of trustA payment historyThe closing statement from the saleIndiana is one of the states where selling a house “on contract” is an ordinary thing to do. House prices in much of the state are modest, and for a small loan a seller may be the only lender available. So Hoosiers hold paper: a landlord in Indianapolis who sold off rentals one at a time, a couple in Fort Wayne or South Bend who sold a parent’s house to a young family, an owner in Evansville, Muncie, Terre Haute or the Gary and Hammond area who took payments instead of waiting for a cash buyer. Outside the cities, farm ground and small acreages change hands the same way.
The document behind these sales is the land contract. You keep the deed, the payer lives in the property and pays you, and the deed passes at the end. Our page on selling a land contract explains how one transfers to a buyer. Where a bank-style structure was used instead, Indiana commonly uses a mortgage.
Foreclosure of an Indiana mortgage is generally judicial, which means a lawsuit and a court-ordered sale. Land contracts are where sellers get a surprise. The contract may say the seller can cancel and keep what has been paid, a remedy called forfeiture. Indiana courts have generally been reluctant to allow that once the payer has built up real equity, meaning a real share of the property’s value paid for, and tend to require a foreclosure instead. Where the line falls depends on the facts of each contract, and other states handle land contracts in their own ways, so put the question to an Indiana attorney before you count on either remedy.
A buyer of Indiana paper generally makes the cautious assumption that recovering the property would mean going to court, whichever document you hold. That shows up in the return the buyer needs on the purchase price: more expected cost on a default means the buyer wants more return, and that means a lower offer.
Modest house prices mean modest note balances, and the cost of closing a purchase does not shrink with the note. As an example only, if a buyer’s closing costs came to $2,000, that would be 10% of a $20,000 note and 2% of a $100,000 one. Some buyers set a minimum balance for that reason. A low balance narrows the field without closing it, and the practical answer is to ask buyers who take smaller notes. Send us the details of your Indiana contract with the balance stated up front, so it goes only to buyers who work at that size.
The house itself counts too. A buyer may order an outside valuation, and an older property that has been kept up supports a better price than one that has been let go.
A contract that appears in the county records is easier to buy than one kept in a drawer, because the buyer can see it in a title search. If yours was never recorded, a title company can tell you whether recording the contract, or a memorandum of it, is possible now.
A long payment history has value, and it is the first thing a buyer will ask to see. Bank statements showing each deposit are enough if you never kept a ledger. Find those, the land contract and your deed, or the note and mortgage, and proof of who has been paying the property taxes. Keep them together, so the same set can go to every buyer you ask.
Yes. Land contracts are widely used in Indiana and are bought and sold. A buyer generally takes an assignment of the contract and a deed to the property, and will want the contract or a memorandum of it recorded with the county.
Generally, yes. Indiana commonly uses mortgages, and foreclosing one goes through the courts. Land contracts can also end up in a court foreclosure, particularly where the payer has paid in a meaningful share of the price. An Indiana attorney can tell you how yours is likely to be treated.
Not necessarily, but it narrows the field. Closing costs take a bigger bite out of a small note, so some buyers set a minimum. Asking several buyers is the way to find the ones who take smaller balances.
In many cases. A buyer purchases a set number of payments and the contract comes back to you afterwards. Because the deed is involved, the agreement needs to spell out who holds title during that period.