Thinking Of Buying A House On Land Contract Need Some Pointers?
I came across a house and over a acre of land for roughly $5000 and the owner may sell it land contract. The house for the most part is structurally sound. But it needs alot of work done to the inside wiring,plumbing, etc. The house has been empty many years a friends grandfather lived there. My questions are if i would buy it land contract what all does that involve? Do I need to have a title search done? Do I have to hire an attorney? I have never purchased anything on land contract just wanting to know what to expect and what to watch out for. Also would like to know if there is any hidden costs and if so what? and how much?
Tagged with: Buying • Contract • House • Land • Need • Pointers • Some • Thinking
Filed under: Articles-Home Repair
Land contracts are good if you cannot buy a house outright. The problem is that you must be very committed to own the house or you can loose a lot of money.
First I highly recommend getting a title search done. It is not typically required at this stage, but you should do so to protect yourself. An attorney should be involved in preparing the land contract, and he should verify that the title is clear. However, a title search will search for more than just a clear title - it will also search for liens that could make it difficult for the seller to sell the property at the end of your contract.
First a land contract typically requires you to pay an amount that is for rent and a second amount that is for your down payment. The amount for your down payment will be allocated for the down payment on the house when you buy the house at the end of the contract. The rent portion you will not get back. Typically you are the one responsible for all of the house maintenance - so if the water tank goes, you have to pay - even though you are also paying a rent.
I also highly recommend that you get the home inspected prior to signing the land contract. This will help you prepare for further home repairs, and also assist in negotiating a final buying price.
The worst thing about a land contract is that if you decide to move or do anything to break the contract before it ends, you will stand to loose the money that has been set aside for the down payment. Land contracts can be anywhere from 1 to 10 years - so you must be committed.