Traditionally, a seller lists their property with an agent and gets payment in full after the buyer obtains financing and the loan closes. However, there is another way to sell a house that can also benefit the seller if they are willing to wait a few years for the full payment. Sellers who enter into land contract agreements with buyers can make more money on the sale of their home and may even be able to sell it faster than if they waited for the closing process to go through.
An ohio land contract is a legal agreement between a home owner and someone interested in buying a home who is unable to obtain traditional financing. There are a couple of reasons a buyer might not be able to get a mortgage loan. Some buyers do not have enough money saved for a downpayment and cannot afford the difference between what a bank is willing to lend and the purchase price of a home. Other buyers don’t have a high enough credit score to qualify for bank financing. No matter the reason a buyer is not able to get a loan, the seller can benefit from the situation.
By offering a land contract to a buyer who has sufficient income to make the monthly payments but can’t get a loan right away, a seller can increase their asking price for the property. Buyers are typically willing to pay more for this convenience. While the seller will have to delay getting the total value of their home for a few years, it can be worth it for property owners who have the ability to wait.
As sellers can see by reviewing a sample ohio land contract, buyers are generally required to pay the balance of the loan after three to five years. This means they will have to be able to qualify for a traditional loan by the time the balloon payment is due. In cases where the downpayment was an issue, it should be easier for buyers to get traditional financing. However, buyers whose credit prevented them from getting a mortgage will need to take significant steps toward improving their credit or risk voiding the land contract.