Agreement For Deed (Rent to Own.. Kind of..)

5 Replies

My wife and I entered into an Agreement for Deed to sell our home in 2012.  We were underwater and our neighbors agreed to buy above market price (so they could have contiguous property and they loved our house) if we could give them 3 yrs to get financing together. In meantime per agreement, they have been paying us $5000/mo which covers our mortgage, taxes, and insurance. They took possession July 2012 and have been maintaining it since with the expectation that they will own. Three years have passed, and they are not able to get financing.  Apparently, they thought we entered an agreement that added them to our deed so that the mortgage could be taken over by them without having to go through mortgage application process. We are not interested in being on the deed with them since we would still be fully liable for the mortgage if they walk. We have been renting elsewhere and were not able to buy another home with the outstanding mortgage hanging out there. They have been paying down the principal, but still not to the point where we could end the deal and sell the house for what we still owe.  Any ideas out there for creative way to get them financed or for us to buy in the meantime..? Thanks!

@Steve Mikottis I would have them get ahold of a mortgage broker to help them and then you both have a timeframe to expect it doesn't sound like they have tried much. 

Seems odd they would have misunderstood such an important part of the process. But, what exact numbers are we talking, mtg balance verses value? I assume this is not an FHA loan, as that would be assumable, if they qualify, and the value was okay. Sounds like your best bet would be to continue the same arrangement until the value and mtg balance line up, so they can finance it.

Originally posted by @Jeremy Tillotson :

@Steve Mikottis I would have them get ahold of a mortgage broker to help them and then you both have a timeframe to expect it doesn't sound like they have tried much. 

 Thanks. Actually they have tried multiple lenders but their situation is that they own a couple of day care centers that are heavily subsidised, and Illinois has big time fiscal issues. Therefore, their income is tenuous at times, and they have multiple other properties/mortgages. They also tried some private lenders. 

Originally posted by @Wayne Brooks :

Seems odd they would have misunderstood such an important part of the process. But, what exact numbers are we talking, mtg balance verses value? I assume this is not an FHA loan, as that would be assumable, if they qualify, and the value was okay. Sounds like your best bet would be to continue the same arrangement until the value and mtg balance line up, so they can finance it.

Seems odd to us as well, but the contract is clear. First mortg bal $371,600 @ 4.875% 30yr fixed. Second mortg bal $150,200 @7.875% 30yr fixed. So total prin bal $521,800. Zillow estimates value at $415,000. County Assessor market value is $425,000.  Paid appraisal in 2009 was $720,000.

@Steve Mikottis ...there are a couple of forums here where you may be able to post your situation like those specific to lenders and if you are interested, perhaps you could post on the marketplace for any interested buyers.

Jerry Stanford, Real Estate Agent in IL (#475166354)

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