Contracts for deed have been around for awhile but we are seeing a new resurgence of them in today's market.

A contract for deed is an agreement between seller and buyer where the seller sells the property over time to the buyer and the buyer makes payments to the seller.  It is similar to a mortgage.

There are three types of contract for deeds-

Straight contract for deed-The seller owns the property free and clear. The only financing on the property is the contract for deed.

Contract for deed with assumption-When the buyer assumes the mortgage but does not have enough cash to make up the purchase price, the buyer makes payments to the seller for a period of time.

Wrap-around contract for deed-The buyer takes property subject to existing financing. The buyer makes payment to seller and seller makes mortgage payment to existing lender.

This is an alternative in today's market when the seller owes more than the market value of home or the buyer is unable to obtain conventional financing.

Contact Pat and Donna if you have questions or want more information.

written by Donna Hiller