Considering selling house on Contract for Deed

1 Reply

Longtime lurker here - always reading and hoping to absorb knowledge. Husband and I bought a house in rural MN for $15k cash in 2010.  We put on a roof, new furnace, water heater, appliances, plumbing and some cosmetic fixes. We did all the work while living in the house. In 2014 we moved out and my MIL moved in. We did not charge her rent, only asked that she cover the taxes, insurance and of course her own utilities. Last month she moved on to a senior apartment and we need to decide what to do with the property. Unfortunately, while Mom lived there my husband started to renovate a bedroom and a den, but never finished the work. We are out of motivation to finish and don't want to sink more money into it. In a finished state, a local realtor said she would list house at $75k.  We've been approached by an acquaintance who is interested in purchasing the property on a CD in it's current state - they would finish the work.  Husband and I sent them terms to consider (Purchase price $72k, 6% interest, 5 year term with balloon payment at end, $800/mo payment). Our buyers considers this a 'good opportunity' - they have credit challenges and would rather pay for a house than an apartment. On paper I think this is the best scenario with the highest gains for us. But I also know the buyers will likely be only a paycheck away from falling behind.  Worst case scenario is that we'd end up with the house again at some point, right?  What other hidden dangers are out there?  Thanks for any advise!

The hidden danger is that they get upset that they lost that paycheck, they are going to lose "their" house, and they damage it on the way out.  Even through the court system it is hard to collect from someone who doesn't have any money.

I would make sure you get a good deposit up front.  I am not sure what rent is in the area but they may just be looking at this as a 5 year rental arrangement with the possibility to purchase.  Without a deposit you are essentially renting it and giving up the rewards of any upside.

Also I would make sure to run a background check on them.  They may have approached you because they don't have many options.

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