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Do I Need a Real Estate Land Contract in Prince George’s County?
If you own land in Prince George's County you may be thinking of selling it. Then on the other hand, you may want to buy land in Prince George's County. In either case do you need a real estate land contract to do so?
What is a Land Contract and How Does it Work?
A real estate land contract is considered to be a legal agreement. It takes place between parties who are buying and selling real estate. It is applicable to all forms of real estate. This includes apartment buildings, commercial buildings, residences, and even vacant land.
This type of contract is similar to financing for a seller. If you were to have a mortgage on your property then you would enter into a contract to pay back that mortgage. This could be a private individual or a Bank or other financial institution. With a real estate land contract you are making a legal agreement to make the agreed upon payments. These will be the payments for the purchase of the property to the individual who owns the real estate.
When you are determining what is a land contract and how does it work you need to fully understand it. This is a legal and binding agreement that both the buyer and seller must sign. A real estate land contract has to be properly completed.
The Terms and Conditions of Real Estate Land Contract
The real estate land contract outlines all of the conditions that the seller wants. This will include the price of the property as well as the payments that are going to be agreed upon by the purchaser. It will dictate the time period in which the property must be paid for. Once all of the terms and conditions have been met then the title of the property is given to the buyer. This will be done through a deed or a warranty deed.
Land Contract Down Payment
Some form of down payment will usually be required. These are usually lower than what would be expected with traditional financing. One of the benefits that comes with the real estate land contract is there are no set rules that apply to it. For example, if the buyer wants to borrow money for the down payment this is allowed. The down payment will be added to the real estate land contract.
Land Contract Terms Calculator
There are a lot of financial calculations that will have to be carried out. This is in order for all the details to be correct in the land contract form. A great resource to use for this is a land contract terms calculator. This will make it an easy task. It will also ensure complete accuracy. The amount of down payment has to be deducted from the purchase price. Then whatever the interest rate is going to be on the balance owed has to be calculated. This is where a land contract terms calculate comes in handy.
Land Contract Form
The real estate land contract is a legal document. It has to contain all of the details pertaining to the sale. To ensure that none of these details are missed a land contract form is filled out. This should be carefully done by someone who is familiar with this like a real estate agent. It should also be reviewed and scrutinized by a real estate lawyer.
The Pros and Cons of a Real Estate Land Contract
The real estate land contract affords advantages and disadvantages to the buyer and seller.
Seller Benefits
For the seller the real estate contract means they are able to sell their property. Where it will then will provide them with an income over a period of time. It has a tax advantage because the capital gains can be deferred or spread out over a longer period of time. This type of sale also makes it easier to sell the property. There could be many potential buyers who may not qualify for traditional financing.
Seller Downside
The seller is still responsible for the property when he has sold the property through a real estate land contract. If the buyer is not able to honor this agreement then the seller has the hassle of nullifying the contract. The seller may also be liable for anything that takes place on the property.
Buyer Benefits
One of the greatest benefits for the buyer entering into a real estate land contract is the flexibility. The buyer doesn’t have to abide by traditional rules like a set amount for the down payment. Usually the criteria for credit rating is not as stringent. It may be that the property being purchased would not qualify for a standard mortgage. This won’t be an issue for the buyer entering into the real estate land contract. If unforeseen financial problems arise the seller may be willing to re-negotiate the terms.
Buyer Downside
With this type of property contract making it so easy to buy property. There may be a tendency for some buyers to over extend themselves financially. They may be making the purchase because they don’t qualify for traditional financing. This may be because they are not in good financial shape to take on the payments. This could lead to where the buyer is not able to meet the obligations. They may have to forfeit the property. This means losing the down payment as well as any payments that have been honored.
A real estate land contract is a perfect solution for sellers who want to move their property quickly. It is an equally good solution for buyers. It is good for those who want to purchase property but cannot qualify for traditional financing.
There has to be some careful thought as a buyer if you wish to enter into a real estate land contract. If you don’t need all the money upfront for the sale this may be ideal. As a buyer you have to determine if this is a better deal for you as opposed to going with traditional financing.
Want to Sell Your Land Without Complication?
You found the right people! At Roddy Offers Buys Houses. We’re serious land buyers who work in Prince George's County and surrounding areas. No matter what condition your land is, we’ll take a look at it and give you a no obligations cash offer. We specialize in closing quickly, so if you need your land gone you found the right people!
If you have any questions about your land, or want to know more about the cash buying process, give us a call! We’re always happy to answer any questions. Call us today at 469-406-6961, or visit our website.