Help! A walk-thru of seller financed deal

5 Replies

Seller is willing to carry a contract for 5 years. We agreed on the purchase price of 60k with 6% interest for 5 years. Smaller down payment to cover closing costs (negotiable). Balloon payment at the end to pay off or renegotiate for longer contract. Does not need more than $600 dollars a month for payment. 

This is my first time writing up a contract. My first deal was purchased off MLS and handled by buyers agent. The last was an all cash deal that was cut and dry. I'm a bit nervous as I have not done one of these before. Trying not to feel like a noob, but have to admit I'm new to this. How would you write this up (I'm in WA state) that protects me and gives the seller confidence it is being done correctly?

The plan is to close at a title company. What is the best way to lock this in and close quickly? I'm open to suggestions from those that have good ideas :) 

Maybe it would be best to have an RE lawyer draft the first one and use that one for all the future purchases, because a mistake on this could really sting.

Let me add some relevant info. I plan to rehab and sell or rehab and hold. 

My end goal is not just to get people's opinions but to educate myself on contracts and strategies. I'd agree this is pretty necessary stuff to be competent. I felt like I was stumbling thru the negotiations and I really want to gain some experience and confidence.

Having never used an attorney in Washington state, I honestly have no idea how complicated that contract would be or how long it might take to draft.  I expect you are right and could get a good one for a few hundred dollars, but each state does things different.

@Eric Roloson , two thoughts.   

  1. .  @Kris L. 's idea of using an attorney is excellent.  Attorney help shouldn't cost much (less than <$200).  They'll have standard forms that can be quickly adopted to your specifics.  Preparing the contract will be quicker than completing introductions  -if you are prepared with all the necessary info (basically a preliminary title report with accurate legal description, seller name and address, Assessor's Parcel Number, ect).  Using a professional will put you at ease.  It will help you to look professional in the eyes of your seller.   You won't even have to mention it, the Attorney's name and contact info will be on your documents.  And, finding an Attorney that you work well with is important to your long term success.  Real estate attorneys also have helpful relations with local title companies.

    Make sure to call several and describe what you need.  Be sure to focus on Attorney's that advertise real estate as their specialty.  My own preference is to work with a firm rather than a solo Attorney.   In my experience a firm (group of Attorney's working out of one office) always has someone, Attorney or staff, who can respond quickly to your needs. 
  1. 2 Check out this link for sample contracts other members have posted on Bigger Pockets. 
    https://www.biggerpockets.com/files  find samples similar to what you want and adopt what another member has done, to your needs. 

Best wishes