Getting seller to accept Land Contract offer

We did this. Had money from the sale of our previous house, but only enough to EITHER buy the land outright, OR build a house....not both.

Fortunately for us, the land owner carried the note ( via a deed of trust, not a land contract ), and we built the house, then worked on paying him off in 9 years versus the 20 we set it up for.

I'm currently carrying a note for sale of 27ac ( again, via deed of trust, title transferred to him at closing ) and he has converted the barn to a dwelling and working on it as he goes. He rented a house for the first 2yrs until he had the place livable. He had been living in NC, and by moving to TN ( he does IT work for an insurance company and works out of his home ), he saved nearly enough in State income tax to make his rent free.

It's a good deal for both of us.....he didn't have the money to buy the land outright......we get a monthly interest income far better than any bank is paying, plus stretch out the capital gains to minimize taxes.

If he defaults on the mortgage, I'll foreclose. It will involve some attorney fees, but that will come out of his equity, and I got enough down to more than cover that. I'll "buy" it back for the amount left on the note, unless it sells for more than that, in which case I still get paid, and somebody else can run with it. He will get some of his equity back if it does sell for more than the note, which right now, I think it would not, but that could change down the road.

Sounds like you need to become more knowledgeable about financing yourself before you get in over your head. Even if it's just so you can ask the correct questions.

25% down is pretty average for raw land. If you are short on cash - why are you working with a buyer's broker as you will have to pay your realtor yourself? Yes, you can deduct that percentage from the sale price - but??

If I was a seller, I'd love to do a land contract. As a buyer, I'd run the other way. An alternative is a deed of trust. Thank the seller's realtor - she did you a favor. Bottom line is giving the seller enough cash so the seller can pay their portion of the closing costs, the commission and any other thing you may ask like a perk test if you will having a septic. Giving them a couple thousand in their pocket also helps.

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Only she who attempts the absurd can achieve the impossible

Doesn't work like that here wolfmom, the commissions set percentage and comes out of the sale price.
If you work with the listing agent only they get the whole commission, if you have your own agent then its split between them.
Either way in most cases the if they work for Brokers, its they that get the lions share.

Allegheny I have to ask are you from the area?
If you where you would know its a real tight knit community.
Really the whole county is...
Its some where it pays to be "local"

Because if you run your own business, and you cut into someone elses, it can be a problem for you.
Some dirty pool played in Lapeer, and for the most part at least legally stuck in the 1800's mentality.

I have to say at the price ,even considering location, that better be spectacular `14 acres.
not saying someone won't pay that. But I won't, think I start the offer a good bit lower.

Hey "downhome" thanks for all the great info, my wife and I live in Troy,MI.

He and his family built it themselves out of pocket over the last 5 years. He does have a good job,but failed to build up any credit. So a Mtg co won't give them a loan for the LC. payoff. We had a 5 year, Balloon payment at the end. He has never even been a day late with the payments to us, that is why were are trying to help rather than just instantly close on them.

NEVER sell property on a land contract without making sure the land is paid for before they are allowed to build on it.

If they are defaulting on the LC, it doesn't look good for them to be able to get a mortgage.

If we wanted to, we could have our land back And the house. That's how it works. They default -they loose everything.

First off, what is similar land selling for in Metamora. I haven't been down that way in some time, and my BIL was the assessor for years, but he's not anymore. Metamora is a bedroom community and the values are higher than they are north of Lapeer.

Call the assessor's office, tell him what kind of land it is (Number 1, Number 2, etc; sandy loam...) and ask what land is selling for that is less than 20 acres. The smaller the acreage, the more it costs per acre. Fourteen acres that is half woods and creek is not very valuable as farmland, but a premium for hunting or residential.

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Nothing is as strong as gentleness, nothing so gentle as real strength - St. Francis de Sales

Your asking someone to act as a bank for 130,000$.???? Im sorry, but thats just asking way to much of them. You need to start with something in your price range, fix it up and sell it. Then you can buy something bigger. Your moving too fast for your finances and it will get you into trouble.

When a seller lists a property theie listing agreement details the terms the seller will accept, so if that seller did NOT say on the listing agreement they would accept a land contract, they want all the $$ up front and the sale done and over with quickly. THey have plans probably for the proceeds from the sale and desire a lump sum sale. Many sellers of homes will not accept an FHA loan because of the strict criteria FHA has for homes is loans on, not worth the fixing up to the sellers so they clearly stiupulate NO FHA loan buyers. Some will not sell to VA loan buyers. It's the sellers property and the sellers choice of how they want to receive their sale price.

Terms are negotiable. Sales price is listed, but often negotiated down.

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Mortgage Underwriters

Anybody here do a land contract VERY recently? I was recently in the process of setting up a small one. It would of been a $7500 sale, half down, on a small lot in a vacation resort community. The realtor called and said their is an issue, give our lawyer a call. My lawyer, BTW, is the go to guy for property transactions in the county. Heading for 70 Y.O. Sharp as a tack, and does an extremely high volume of real estate transactions.
The lawyer advised me that, due to recent changes in federal law (as part of the banking system overhaul), an individual, lacking a mortgage broker's license, can not legally engage in a land contract as a lender. He then stated that the state is real unhappy with this over-reaching by of the feds. and the state A.G refuses to enforce the law at the moment. Apparently, the state is still allowing these contracts to be filed in the local court houses. The issue becomes that it is then possible for a buyer to default, based on the clear fact that the seller broke federal law by illegally engaging in a mortgage transaction as an unlicensed lender. At this point the seller would have nothing. The deed is in the buyers name, the seller hold illegal paper and cannot enforce the agreement. He stated that to his knowledge, there has been no test case to establish a precedent, but it's only a matter of time.

I didn't pursue it further, as I just signed a cash offer for $2K more, but it is an interesting piece of info. On the local level it will be interesting, as I do business with several investors who have entire operations set up to flip raw land, and seller financing is what makes it work.


Edit: Just did some quick research on this. It appears that the "SAFE" act of two years ago clearly moved land contracts into the "mortgage" column as far as the feds. are concerned, which is why my lawyer strongly recommended that I stay out of that mess. It also appears that starting 1-1-14, new Dodd-Frank and Consumer Protection division regulations. will further restrict the land contract business.

Ya, that Dodd /Frank issue is quite amusing, consider how they were directly linked to the crash of 2008. It's all on u-tube. The Fox and the Chicken coop,trying to look like their hands are clean.

Yea, the whole affair is pretty sickening. Apparently all the "financial reform" to date has done absolutely zero to prevent the next "too big to fail" criminal enterprise from repeating the last meltdown, but thankfully they got a handle on the land contract issue. Idiots.

Hello,

I sure appreciated everyone's replies. After looking at Lapeer County's register of deeds info on the Metamora parcel, the most current assessed value was $48,200. So I doubled that,and our 1st offer will be $96400. Our agent ran "comps" for Metamora Township, and found out that similar land was selling for about $108,410. We will have our agent submit a "written" offer, asking for seller financing, with 10-12% down. The worst thing they can say is no. We have other land we are interested in, but this one is our first choice, and yes it is a gorgeous piece of land, but no reason to overpay for it! Thanks again everyone!

You misunderstand what I am saying.

The listing agent has a fiduciary relationship with the seller. An agent that is representing a buyer without a "Buyer Broker" contract still has a fiduciary relationship with the seller. An buyer that has signed a Buyer Broker contract with a buyer's agent has agreed that the agent has a fiduciary relationship with the buyer - not the seller.

The buyer's agent's payment (commission) is agreed upon in the buyer's contract (not the sales contract). Most times it is deducted from the sales price of the property ie: half the total commission.

What you have said is correct without a Buyer Broker contract. BUT if a buyer wants true representation, he really needs to find an agent that represents you (as the buyer) in the purchase of property.

BTW: no commission is fixed within in an area ie: 6%, 7% or 10% for raw land. That is price fixing although seldom will anyone state commissions are negotiable. (I think the words are "customary to charge...") You can negotiate the commission when you list a property or when you are in a sales negotiation.

An agent has to work under a Broker's license, at least here in AZ. There are different types of brokerage companies. 100% companies give the agent 100% of the commission and the agent pays for everything (sign instillation, advertising, a portion of the office overhead). Other companies take a certain percentage of the commission and pay for advertising, etc. The amount of commission the brokerage takes can change as the agent becomes more seasoned and becomes a top producer. A buyer should know what kind of a brokerage firm their agent works for as that can influence how negotiable the commission is.

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Only she who attempts the absurd can achieve the impossible

I have found (we are looking for the same thing) that more often than not the listing agent will never even ask teh seller because buying on a land contract means they dont get paid until you finish paying it off.

We have had our best luck finding properties that are not listed with a realtor. We actually bought 5 acres for 1/2 of what other properties in the area are selling for becasue the seller didnt have to pay a realtor we got a discount. but Whao 100K for 14 acres? thats a lot of dough. We paid 4500 for our 5 acres in the middle of an up and coming vineyard area

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Try a third party private Mortgage, with interest rates so low there are some people willing to lend on raw land especially if you have other assets to secure the loan or co-signers with assets

There are exclusions in the safe act for owner financing of 1 property per year and 3 or more properties per year. Here is a 3 page PDF that explains the guideline.

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Mortgage Underwriters