Selling/Buying houses with terms.

Real Estate Agent with Your Town Realty

I have been a realtor for 10 years now and have ran into alot of agents that will not present offers to their clients that are not the traditional bank mortgage/cash offer.  I have bought and sold many houses using Land Contracts, having our closing company create mortgages that the sell holds/ or I hold if im the owner, or just taking over there debt and making the payments for them.  These kind of transactions are called "terms" transactions.  There are 10 times more buyers that can buy with "terms" that there are with a traditional mortgage or cash sale.  Plus with terms I can just about always pay the sellers full asking price and I always get full asking price when I sell with terms.  Anyone looking to sell with "terms" is gong to bank more money.  they get a higher price of sale AND they get interest on the monthly payments owed to them.  


Traditional sale  $200,000 listed price.  May sell for  $190,000 - the closing costs= about $171,000 ( In western PA the closing cost on listed properties is around 10% of the sales price)

Terms sale $200,00 listed price.  Sell for $200,000 with 20% down payment and create a mortgage for $160,000 amoritized over 30 years with a balloon payment in 5 years would be a total pay back of $858.91 a month+ taxes and Insurance.

If you collect that payment of $858.91 for 5 years that would be a total of $51,534.60 + having the taxes and insurance paid on top of that. The buyers would then owe you $146,679.25 

So they would give you $51,534.60 over 5 years and a payment of $146,679.25 at the end of 5 years + you got $40,000 as a down payment for a total of $238,213.85

So you can either have a total of $171,000 now and not have as many buyers available to give you that, OR you can have a total of $238,213.85 and have 10 times more buyers available.

This is something every seller should look into when selling a property IF they do not need the debt off their credit to buy another house.  This works great for vacant houses and/or free and clear houses.


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