Thinking About Selling A Property On Contract, What Do I Need To Know

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  • Magneto

    Master
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    Dec 6, 2009
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    New Albany
    I have a condo I am thinking about selling on contract. The buyer is a relative of my wife's that this place would be perfect for. Her daughter lives close and the property has a stair lift already installed plus a few other amenities for someone her age that would help her day to day. I was wondering if anyone had any advice on anything I need to make sure of when doing this. I have a monthly amount in mind for payments that should be agreeable to everyone, and I really don't see any negatives to doing this for everyone involved. I just figured that I would ask for advice because I am sure someone here has done this before.
     

    hoosierdoc

    Freed prisoner
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    Apr 27, 2011
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    Can you evict her if she stops paying? A handicapped family member?

    dave Ramsey would not speak kindly of this arrangement. Clearly your heart is in the right place but this has the potential to cause serious generational ripples. Unless it’s an obscure family relation and not much emotion in it.
     

    Cameramonkey

    www.thechosen.tv
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    May 12, 2013
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    Never do business with family, or friends whom you want to keep.

    Can you evict her if she stops paying? A handicapped family member?

    dave Ramsey would not speak kindly of this arrangement. Clearly your heart is in the right place but this has the potential to cause serious generational ripples. Unless it’s an obscure family relation and not much emotion in it.

    THIS TENFOLD.

    Find an agent that will work on your behalf to insulate you from them. Trust me the fees you pay to them will be worth its weight in gold [STRIKE] if [/STRIKE] when it goes south. (Ive seen this fail more often than not)

    The ability to be able to deflect is priceless. At least if you value your relationship to the rest of your family. Because if it goes south and you have to evict, odds are heavily against you in the eyes of the rest of the family; "OMG, can you believe what Magneto did to poor, poor, old aunt Ruth? I cant even... Who would do that to a relative? And a disabled one at that! FOR SHAME!!!!!!!"

    Now if you dont give a flying F about the rest of your family and are not against kicking a cripple out on the street for breaking the terms, full speed ahead! Fire for effect! etc.
     

    churchmouse

    I still care....Really
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    Dec 7, 2011
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    Never do business with family, or friends whom you want to keep.

    Bingo.
    But only you know what is proper here.

    We have sold some of our rental property's on contract but only to people that had been in them over a year and paid on time.

    There are some things you need to address as to taxes/insurances etc. Talk to your tax preparer about this. She will have to be on the title and registered as such. She should provide insurance and pay the taxes as well. Dot all of the "I"s and cross all the "T"s.
    Make sure you have a well laid out contract as to late fee's/non-payment eviction.
     

    henry0reilly

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    Mar 12, 2009
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    Montgomery County
    I bought a house on contract. There was a clause that said until I had 20% equity based on the sale price any breach of the contract, including just being 1 day late with 1 payment, allowed the seller to declare the contract void. After 20% he had to go through foreclosure proceedings. Based on 10% down and the monthly payment amount I would never have had 20% equity before the end of the 5 year contract. I'm quite sure the asshat planned on watching me improve the value of the house and then finding some excuse to take it back. Fooled him, I paid him 20% down instead of 10%.
     

    snorko

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    Apr 3, 2008
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    Use a real estate attorney. I have bought property on contract, have three real estate licenses in two states, and have been in the business for almost 30 years.

    I would not do this myself without an attorney .
     

    edporch

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    Oct 19, 2010
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    I sold a house a few years ago here in Indiana.
    It was a private sale to somebody who couldn't qualify for a mortgage.

    Instead of a contract, I closed with them at a title company, and did my own private mortgage with them.
    I got the mortgage paperwork online and drew it up myself.

    If memory serves, I did it this way instead of a contract sale because in the case that they defaulted on payment, there was less legal hassle to foreclose.
    I forget the details now, but it seemed the best way to do it.

    They paid it off this last December, and I just filed a Mortgage Release with the County Recorder.
     

    eldirector

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    10   0   0
    Apr 29, 2009
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    Brownsburg, IN
    Ed may have the best idea, if you are set on doing this.

    If they can afford to pay you, they can afford a mortgage. If they CAN'T afford a mortgage, well.....
     

    spec4

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    Why can't she get a regular mortgage? IMO you are asking for it for minimal return and are subject to having her problems become your problems. Tell the family you are not a bank. I once bought and sold on short term contracts when rates were sky high. The buy was sold in less than two years. Our sell, fortunately, was to straight up people who paid on time and paid us off in the agreed short term period. Rates had gone down. I only did it because I was in a box. I got lucky.

    Had an uncle who sold his house to foreigners on contract because they apparently couldn't get a mortgage. He then moved to Florida. They never paid him and trashed the house. Uncle died and his kids got to do the cleanup and get rid of the dirtbags. Being in banking, I predicted all this. They called me after the fact.
     

    chenowethpm

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    Feb 12, 2019
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    Indianapolis
    I have to say, it all depends on the parties involved. I bought my first house on contract cause I didn’t have good enough credit to get a mortgage at the time. Having an honest landlord, he sold me the house we had rented from him for 3 years. We fixed it up a bit and sold it after 2 years of owning it. I’m very thankful this man did this for us which enabled us to make a sweet chunk and he got to get out from under the house as well. It enabled us to be able to get a mortgage on the house I own now. Without him giving us the chance we may would still be renting.
     

    russc2542

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    24   0   0
    Oct 24, 2015
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    Columbus
    I can only echo the first several replies in here.


    Here's another consideration: it wasn't said outright but presumably this person is elderly and not in the best shape... can they financially fulfill the contract (working vs retirement income, medical bills)? Will they survive to fulfill the contract? To whom does the property revert if not fulfilled?
     

    Trigger Time

    Air guitar master
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    Aug 26, 2011
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    THIS TENFOLD.

    Find an agent that will work on your behalf to insulate you from them. Trust me the fees you pay to them will be worth its weight in gold [STRIKE] if [/STRIKE] when it goes south. (Ive seen this fail more often than not)

    The ability to be able to deflect is priceless. At least if you value your relationship to the rest of your family. Because if it goes south and you have to evict, odds are heavily against you in the eyes of the rest of the family; "OMG, can you believe what Magneto did to poor, poor, old aunt Ruth? I cant even... Who would do that to a relative? And a disabled one at that! FOR SHAME!!!!!!!"

    Now if you dont give a flying F about the rest of your family and are not against kicking a cripple out on the street for breaking the terms, full speed ahead! Fire for effect! etc.
    Yep. I really cannot add anything here.
    Also,
    Always have a written contract, i dont care who its with. Theres a reason that advice is biblical. Peoples been screwing people for thousands of years. Titles and blood dont matter to all no matter how good of intentions they all had entering it.
     

    KittySlayer

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    4   0   0
    Jan 29, 2013
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    Northeast IN
    Never do business with family, or friends whom you want to keep.

    ^^^this^^^

    I can only echo the first several replies in here.

    Here's another consideration: it wasn't said outright but presumably this person is elderly and not in the best shape... can they financially fulfill the contract (working vs retirement income, medical bills)? Will they survive to fulfill the contract? To whom does the property revert if not fulfilled?

    and a whole lot of ^^^THIS^^^

    Also, who pays the condo maintenance fees? What is she stops paying those fees?

    In todays real estate market when properties sell for listing price within a week there is no reason to sell on contract. Particularly to a relative. Simply say No No No... this will come back to bite you in the butt bad.

    If you are feeling charitable/generous/guilty then write her a check for $x,xxx to assist her in getting a mortgage or finding somewhere else to live. Her other family members could kick in some cash too or cosign on her mortgage if they believe it is a the right thing but don't want to pony up any cash. Not your child, not your parents, not your problem.
     

    Magneto

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    1   0   0
    Dec 6, 2009
    2,188
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    New Albany
    Thanks for all the advice. i need to clean up a few issues I neglected to mention. Her daughter is going to be heavily involved. Her daughter owns a condo about 100 feet from this one. Her daughter could not get a mortgage because of the payments on her condo she currently owns. Her mortgage company told her that she will be able to in two years, so that would be the plan. So in two years the balance would be mortgaged and we would be paid off.
     
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