Contract Sales or contract for Deed - Do we see them on the horizen

Managing Real Estate Broker with Keller Williams Northland

If you came in late, you may not remember 20% interest rates. How did the real estate market function then?

Many foreclosures, but real estate agents are resilient. Transactions were cash, mortgage assumptions and contract for deed. To stay in business you looked for clients with deep pockets, or creative financing. This market has returned.

My market is being dominated by Wall Street. The secondary market, $300,000+, sales are driven by all cash sales. A local market will soon cease to exist as rentals take over the market. Inventory is limited by sellers not willing to give up their existing low interest mortgage and builders boxed in by supply chain issues. It is not unusual to see a new residential development where 10% to 20% are sold and then appear as rentals.

Back in 'the good olde days' agents put on their thinking caps to create a viable market. Contracts-for-Deed/ land contract/ articles of agreement etc. were common. And option contracts and installment sales were in vogue. That is where we are today.

Today's economics will drive municipalities to make changes. NIMBY (Not in my back yard) needs to be restrained by zoning boards (ZB). Most ZB members are appointed not elected. SFR developments, 1 to 4 units, heavy on the 2 to 4 need to start appearing more. A duplex today is normally a small investors dream, but as a condominium it becomes an affordable home for someone trading a rental for home ownership.

Someone with good equity could take a rent with option-to-buy enabling someone to purchase the property on time while investing the cash flow in other property.

Today's market requires an agent to be more creative.


Comments (1)

Roy Kelley
Retired - Gaithersburg, MD

I hope all is going well for you.

Have a productive August!

Aug 12, 2023 10:58 AM