Getting seller to accept Land Contract offer

allegheny · #1 11/10/13, 10:02 AM

Hello,

My name is Paul, and this is my first post! My question is: My wife and I found a nice parcel(14 acres) in Metamora,Michigan. Our "Buyers" agent asked the "Listing" agent about a "Land Contract", and she said no. Currently banks(Riverbank Finance & Greenstone) around here want 20-25% down, and we only have 10-12%. What are some possible ways to sway the seller? Thanks!

P.S. I just found this forum on the internet, and it seems very informative!

DaleK · #2 11/10/13, 10:16 AM

What would convince YOU to lend someone you don't know a large amount of money? Chances are it'll take the same to her.

ronbre · #3 11/10/13, 10:20 AM

let them know that a land contract is safe ..cause if you miss payments the land goes right back to them, and they hold the deed

edcopp · #4 11/10/13, 10:30 AM

If all these agents are involved, let them do their jobs. They need to get your offer accepted to get paid. Real simple.

You have 10-12% of the price of the property to put down. Just move on. There are lots of properties for sale, that you have not looked at yet.

Whenever you make an offer, be sure it is in writing. Nothing else will hold water. Make sure there is a definite time stated for acceptance of your offer, like for instance 5:00 P.M. (EST), Nov 18, 2013. If they can not answer on time move on, do not waste your time

You are the guy with the money. Without money nothing happens, and they all know this. Good luck.

7thswan · #5 11/10/13, 10:41 AM

Dh and had our old farm land up for sale, we sold the house and some land seperate. The market was not moveing. A young couple came and looked at it during that time. They sent us a nice handwritten letter. We decided to sell to them on a LC. They have built a house and are now in the process of defaulting after 5 years. It has been 1 month,we are giving them a bit of extra time to get a MTG. Why they did not make sure they could get a MTG. WAY before now is another story. This has put us in an awful predicimate, as you can imagine.

po boy · #6 11/10/13, 10:42 AM

Your 10 to 12%will barely pay the realtor fees. Get more to pay down or find another property.

||Downhome|| · #7 11/10/13, 10:47 AM

The Reason people who choose to not do land contracts do?
Is normally because they want a full pay off, Instant not X years.
Interest on the that land contract is not much in the big picture.

Then you have those that specialize in land contracts, some gamble you'll make a sizable down payment , under stiff terms and forfeit you stake.
Then they resell the house again under similar deal.
that's their pay in the big picture, and those who don't well there the make the interest.

The First house I looked at was sold a undetermined amount of times (I don't want to commit a number, but it was a lot.) It was in the 150,000 dollar market, 20% down and X payment, X months, no body stayed longer then a year and it sat empty not long. He was payed for that house plus on all those contracts.

Then you have folks who sell LC just to sell it!

I'm Familar with Metamora,Michigan.

Its a nice place but to me expensive.

Watch your speed!

I don't think they will have a problem selling it.
More then likely want the money to put into another deal, just like your a little short
Any thing less than "that" leaves them a little short.

Wonder what the asking price and offer where?

Yvonne's hubby · #8 11/10/13, 10:50 AM

Quote:

Originally Posted by edcopp

If all these agents are involved, let them do their jobs. They need to get your offer accepted to get paid. Real simple.

You have 10-12% of the price of the property to put down. Just move on. There are lots of properties for sale, that you have not looked at yet.

Whenever you make an offer, be sure it is in writing. Nothing else will hold water. Make sure there is a definite time stated for acceptance of your offer, like for instance 5:00 P.M. (EST), Nov 18, 2013. If they can not answer on time move on, do not waste your time

You are the guy with the money. Without money nothing happens, and they all know this. Good luck.

Some folks like the idea of selling on contract, usually people who really dont need their money today, or folks who want to save a little on their taxes by spreading capital gains over time. However most sellers simply want to sell their property, take their money and move on with their lives. It would also appear that the OP is not they guy with the money.... he is the guy with 10 or 12 percent of the money. Sellers usually want to wait for the guy who actually has the money or can readily get the money via a bank.

copperkid3 · #9 11/10/13, 10:53 AM

Have you checked out this site and related properties yet?

http://www.zillow.com/metamora-mi/

allegheny · #10 11/10/13, 10:56 AM

The asking price is 130K, and we have not put in a written offer yet. Our "buyer's" agent was just asking the "listing" agent if a "land contract" was an option. Thanks again everyone for all the great replies!

agmantoo · #11 11/10/13, 11:04 AM

The agent may be the person that doesn't want a land contract as it may entangle the agent receiving his commission as timely as desired. If you can contact the land owner see if you can circumvent going through the agent with your offer. On raw land and with 10 to 12 percent deposit along with a good interest rate to me, the owner, I would gladly sell.

edcopp · #12 11/10/13, 12:02 PM

Quote:

Originally Posted by allegheny

The asking price is 130K, and we have not put in a written offer yet. Our "buyer's" agent was just asking the "listing" agent if a "land contract" was an option. Thanks again everyone for all the great replies!

Agent opinions have no value. It is their job to get the sellers opinion (in writing), thats what they get paid for. Other than that, they do not get paid.

If it's NOT in writing, it does not exist.

geo in mi · #13 11/10/13, 12:19 PM

It is a negotiation. It doesn't end until you and the seller sign a purchase agreement. Your buyer's agent will advise you as to how to go about it... You have to present the seller with a written offer...and the seller has to refuse, accept, or present a counter offer, at which point you have to make your next move.....refuse, accept, or a new counter offer. Informally, your own agent can ask if there is ANY way a land contract can be negotiated. If the answer is no, absolutely no, then you will just have to come up with a way to finance the amount yourself. And in the end--even that may come with the seller accepting another buyer's offer--you may just have to walk away from this one. Your agent is working on your behalf, so she should be able to come up with some ideas. You might also want to talk to a mortgage banker to get pre-qualified, based on your down payment, your credit score, and your ability to pay back a mortgage, your income, your total debt to income ratio, and all that important stuff.

Because of the mortgage bubble popping a few years ago, the new paradigm seems to have reverted to the old days: no more than 1/4 your income should be spent for your total housing; no more than about a 35% debt to income level, AND a 20% down payment. This formula should ensure that you will have enough income left over to pay your other bills---food, clothing, retirement, car, children(all those insignificant other things...)

If this is bare land, and at that price it seems so, how will you finance the building of a home if you haven't got the cash? Most banks will not finance a home building loan without you having a clear deed to the land.

Welcome to the forum, good luck with your dream.

geo

FarmboyBill · #14 11/10/13, 01:13 PM

AND Those contracts may have a doz pages in them. Most of them you have to sign and date.

Old Vet · #15 11/10/13, 03:47 PM

I bough my property on a land contract. But I also got a mortgage that year. When I got the mortgage the person with the land contract was disappointing because he sold it 11 times on a land contract.

Molly Mckee · #16 11/10/13, 04:33 PM

The seller is doing you a favor. Land contracts are not usually good for the buyer, it's too easy to lose your whole investment. Find a place you can buy, you could save yourself a lot of grief. There are several people around here that have sold and resold property on land contracts, it can be great for the seller.

65284 · #17 11/10/13, 04:44 PM

Quote:

Originally Posted by 7thswan

Dh and had our old farm land up for sale, we sold the house and some land seperate. The market was not moveing. A young couple came and looked at it during that time. They sent us a nice handwritten letter. We decided to sell to them on a LC. They have built a house and are now in the process of defaulting after 5 years. It has been 1 month,we are giving them a bit of extra time to get a MTG. Why they did not make sure they could get a MTG. WAY before now is another story. This has put us in an awful predicimate, as you can imagine.

How/where did they get the money to build a house? Seems like it would have hard to borrow it without title to the land.

sisterpine · #18 11/10/13, 04:51 PM

We bought our Montana land on a LC back in 1990. I believe I was for ten years at ten percent which at that time as not horrible. We did get a mortgage after we built the house and paid off the land.

I also carried a second on a house I sold once. It was very intimidating because, even though they eventually paid me off when they sold, the payments were often late. Really stressed me out at the time.

haypoint · #19 11/10/13, 06:26 PM

Metamora is a bit "upscale". Many Hobby Farms and Horse Farms. Lots of cheaper areas in Michigan for homesteading.

Get an amortization printout that shows a 10 year pay out for $130,000. At around $1500 a month, you'd be giving the seller over $181,000. That is the seller's only advantage.

TnAndy · #20 11/10/13, 06:39 PM

Quote:

Originally Posted by Old Vet

....When I got the mortgage the person with the land contract was disappointing because he sold it 11 times on a land contract.

ahahhaaaa.....no doubt he was counting on #12 !

Land contracts are great for sellers.....they avoid the hassle of foreclosure process they have to do with a deed of trust. It is more like "rent to own", and many of the renters ( like Old Vet's seller's case ) simply walk away at some point.

Unlike a Deed of Trust,you have ZERO equity until the last payment is made and title transfers to your name. Doing any major improvements, especially building a house, is a risky proposition.