Land Contract home sales in Michigan at times reflects about 18% of the annual homes sales across the State. Land Contract home sales in Michigan are popular because Michigan has favorable laws regarding this type of home sale, and it provides an option for buying a home if your credit standing is in poor condition.
A Land Contract (sometimes called a ‘Contract for Deed') is essentially a private sale of a home where a down payment is made, and monthly payments are made to the seller which include interest and principle. When the contract is fulfilled the seller is legally obligated to transfer the deed to the buyer. Sounds simple enough doesn't it?
There are many aspects of this that make is a desirable transaction for the buyer, as mentioned above if they have poor credit. However, what many buyers who read this or other articles about Land Contract home sales in Michigan sometimes fail to understand is that credit worthiness is an indicator of responsible conduct, and a credit report and credit score reflect a pattern of performance with finances.
So although a seller is a private individual, and not a lending institution, they still are going to expect proof of credit worthiness to some degree. That is why when working with Land Contract home sales in Michigan it is advisable to the seller that the applicant submit a financial application that can be verified, much like applying for a lease on a rental property.
However, since a land contract is generally a much longer commitment, one should being more thorough in reviewing an applicant, as unlike a tenant, they buying in a land contract will have the rights of a homeowner and be able to make modifications to the home without obtaining your consent, etc. Further, if the buyer defaults on the land contract, the seller must foreclose through the court system and then follow through with an eviction if they are still occupying the property in order to get the home back.
So one wants to be thorough on the front end when considering Land Contract home sales in Michigan, and make sure all efforts are made by all parties to make sure it will be a success for all involved.
As an example, I recently sold a home on land contract. I represented the buyer at their Realtor in the transaction. The buyers had poor credit, but they had good income. Their story was that they had experienced a tragedy in their family, and ruined their credit paying medical care and hospital bills for their daughter who had been involved in an accident. They were in the process of recovering from this, and had an insurance settlement to use as a sizeable down payment, and verifiable income, just a poor credit report. I was able to help put the sale together for them, and the seller agreed terms and the home was bought on a land contract.
When it comes to Land Contract home sales in Michigan, buyers should realize that although the process for buying a home this way appears easier, they still need to have verifiable income and a down payment, even if their credit is poor, in order to make the deal happen. I hope this helps answer some questions about Land Contract home sales in Michigan. For more information, contact me directly at: 269-441-8182 or fill out a form on my website at: www.michaeldelaware.com.