In the world of real estate, buying a property typically involves cash payments or securing a mortgage. However, there’s another avenue that often goes under the radar: contract sales. Today, we’ll delve into what contract sales are, how they differ from traditional purchases, and why they might be an excellent option for both buyers and sellers.
A contract sale, in essence, is a unique real estate transaction where the buyer purchases the property from the seller. The distinctive feature here is that the seller retains equitable title while the new owner gains legal title. In simpler terms, it means you’re essentially making payments on an agreed-upon schedule and terms negotiated directly with the seller. Monthly payments are the norm in most cases.
Contract sales can be incredibly beneficial for buyers, especially those facing less-than-perfect credit situations or extenuating circumstances like a recent divorce. Even though mortgage qualifications have become somewhat more accessible in recent years, contract sales offer the flexibility to tailor terms and interest rates to suit both parties. Buyers can negotiate rates directly with the seller, potentially resulting in rates above or below the market average.
“Contract sales can be incredibly beneficial for buyers.”
Sellers can also reap rewards from contract sales. One significant advantage is the ability to tap into a wider pool of potential buyers. Unlike traditional sales listed on the Multiple Listing Service (MLS), contract sales often fly under the radar. This means a seller can attract a diverse range of buyers who might not qualify for a mortgage through conventional means.
When it comes to contract sales, the down payment can vary. While some contracts may require as little as 5%, it’s more common to see down payments in the range of 10% to 20%. Additionally, these transactions often come with a 30-year amortization period.
If you’re intrigued by the concept of contract sales and have questions about how they could benefit you as a buyer or seller, don’t hesitate to reach out to us. Whether you’re a seller looking to expand your pool of potential buyers or a buyer in search of the right property, we’re here to help you navigate the world of contract sales. Feel free to contact us anytime.