Selling on contract question (buying a home, buying, nursing)

[Naptowner]

Originally Posted by machman

OK,

That makes sense. I have no idea what downpayment is typical for a contract sale, so I can see that if it were less than that seller's commision, she would get it. So then, I would assume whent he contract buyer is able to obtain financing, the agent would not then charge a commision again, correct?

It depends on what your listing contract says. You might try to hunt down MikiJayne from these boards and ask her what a typical listing agreement says about buying on contract. I would imagine the broker is entitled to just as much commission if you sell on contract as if you sell outright, and that the commission is a percentage of the sales price. So if the downpayment is enough to pay the commission, the realtor wouldn't be entitled to come back in and collect a second commission if the contract buyer decided to get a loan for the balance of the contract price.

Just about any mortgage is going to have a due on sale clause, and in Indiana a contract sale will trigger it. So will a lease with option to buy. Once you sell someone the right to buy your property at a future date, you've triggered the clause. It's probably not a big deal right now, since banks aren't necessarily looking to add another home to their list of foreclosed properties, but if the market improves and interest rates go up, banks may be inclined to investigate.

The danger of a contract sale is that the buyer will default, leaving you stuck with the mortgage without getting any income. In that case you'd have to rent or sell the property again to keep money coming in to pay the mortgage, which would put you right back where you are now.

[Michelle Morris]

I have been summoned!! Thank you, Naptowner, for thinking of me

I have been told that in this case, I would get paid when the buyer was able to negotiate a mortgage and actually buy the house. Until then, I would get nothing.

There are a lot of risks involved for you though--- what is to prevent this person from walking away after a few months?? What assurance do you have that they will maintain the property? Who will be paying the Homeowner's Association dues? Insurance? What will you do if they don't pay? Court costs?

It just seems too complicated, and too much trouble. I would continue to market it traditionally, lower the price if you need to. Think of offering other things to the buyer like a year's worth of lawncare or maybe a few months of maid service or throw in the big screen tv. What is your occupation> Can you get them a discount on something they might want? Pull in favors that people owe you.

[machman]

Thanks so much for all of your input.

I have tried to communicate with the realtor as effectively as I can, but with my currently being in Arizona I often get the feeling that unless I bother her all the time, she forgets about my home. I have told her that by all means I would be willing to reduce the price of the home, I just cannot afford to go under what I owe on the home after her fees. As it stands now, she would be the only one to make any money, which I can live with as long as I do not have to dig further into savings or retirement. It just frustrates me that I did not sale the house two years ago instead of renting it out then. I thought I was doing the wise thing by keeping the house as a future investment as long as I had a tenant in it. Live and learn.

I have been without work now for several months (middle management, I am either over qualified or under experienced when I apply to positions), and my home has been empty since November, so it has become a HUGE financial burden.

Thanks again for you feedback.

[Naptowner]

Originally Posted by MikiJayne

I have been summoned!! Thank you, Naptowner, for thinking of me

I have been told that in this case, I would get paid when the buyer was able to negotiate a mortgage and actually buy the house. Until then, I would get nothing.

There are a lot of risks involved for you though--- what is to prevent this person from walking away after a few months?? What assurance do you have that they will maintain the property? Who will be paying the Homeowner's Association dues? Insurance? What will you do if they don't pay? Court costs?

It just seems too complicated, and too much trouble. I would continue to market it traditionally, lower the price if you need to. Think of offering other things to the buyer like a year's worth of lawncare or maybe a few months of maid service or throw in the big screen tv. What is your occupation> Can you get them a discount on something they might want? Pull in favors that people owe you.

Many contracts don't require the purchaser to ever get a mortgage; essentially, the seller finances the entire purchase. I would think your listing contract would entitle you to a piece of the purchase price if the home sold while it was under your contract, regardless of whether it was an outright sale or a contract.

In a lease with option to purchase, there is also typically a large downpayment, and the buyer/tenant is required to purchase the property outright in two years or so for an agreed-on price. That's significantly less risky, but it may be more difficult to find a buyer. The reason either option might make sense is that it allows you to sell to someone who doesn't have the credit to get a mortgage.

Another option is to agree to accept a down payment in the form of a promissory note and then carry a second mortgage on the property. This is not uncommon in commercial deals, but less so for homes because of requirements that the buyer disclose the source of the money used for a downpayment, and banks don't like to lend on homes where the buyer has no "skin" in the deal.

[machman]

I would like to thank everyone for their feedback. I am not sure what I will be doing at this point, but all of the information provided will be very helpful. Thanks again.

[JulieL]

machman,
You need to ask your realtor to put it on every website that they can find for free. Craigslist might even be an option. Also, does the realtor ever do open houses? Some other ideas to help sell would be offer special financing. The realtor would need to advertise special financing available. This lets people know that you are willing to help someone get into the home. Maybe you could offer to pay a certain percentage of their closing costs, points, and prepaids. They call this sellers concessions.

Good Luck,
Julie L

[machman]

I honestly do not know how much she IS doing for sure, as I am in Arizona. To be honest, I certainly feel like she could be doing more, but then again with the market, it may simply be that no one is interested.

All I do know is that know I have told her I would be willing to rent the home out again, and that has been over a month, and she has found on one, which is crazy. A nice home in a quiet area with a great school system, should attract SOMEONE. As it stands now, it is just a giant drain on my finances. I have paid a mortgage payment on this house now since November of last year, with no one living in it. That is money that I could have much more readily used elsewhere in my life, or left in my retirement where it belonged. I will not let the house default though, as I do not want to crash my credit.

It is just do difficult to do things from this distance. When I selected my realtor, I chose someone that had reputable name in the area, and just felt I was doing the right thing. Unfortunately, you never know until after you make the agreement. I am hesitant to keep my realtor; I am hesitant to let her go only to find that someone else will do nothing more as well.

[crystalswish01]

Have you sold your home yet? If not how much are you asking? How many bedrooms does it have? Does it have any acreage? I am trying to find a home to buy on contract.

[machman]

Hello,No, I have not yet sold my home. There is currently a renter in the home that had originally stated they wanted to buy the home after they rcvd their tax refund to use as a down payment, but I have not even rcvd Feb rent yet. The home has 3 bedrooms, 2 full baths (one is a master bath that has seperate garden tub and shower stall) large utility/laundry room, good size pantry, all new flooring and paint throughout just last year. it does not have any land to speak of, but does sit on a small lot in a quite farming town just outside of Pendleton Indiana, near Anderson. if you would be interested in seeing pictures, provide me with your email, and I can send photos as well as a scan of the floor plan.Mark

[crystalswish01]

my email address is thejonses@comcast.net