Contract Sale - What Should I Know?
Posted: Thu Aug 08, 2002 4:15 pm
I haven't decided for sure yet, but...
I'm considering taking a new approach to try to sell my MH. I swore I would never consider selling it on a contract, but after two years and no sale, I'm ready to try anything. What I'm talking about is selling it on something similar to a land contract (I can't technically call it a "land contract", since the park owns the land), where the buyer would assume my payments with a nominal down payment. They would pay me, and I would pay my finance company. The initial note would remain in my name, but I would hold the buyer's note, and be on the title as a secured party. The buyer would assume responsibility for the monthly lot rent. I have had several inquiries from potential buyers looking for this type of arrangement, some admittedly coming from a bad credit experience. In the past, I have declined such inquiries, my philosophy being "If the bank doesn't want to deal with you, why do I?". However, maybe someone here has had a more positive experience going this route.
Some obvious concerns I have:
The most obvious - what if the buyer defaults? How difficult would it be to foreclose if I have to? I've heard that this process can take months. Has anyone had experience with this?
What if the buyer trashes or severely neglects the property? What are my rights in regard to repossession? The last thing I want to do is have to go in and do a bunch of restoration work because someone destroyed the house and/or defaulted on the note.
Since I am going to be the one who has to determine the buyer's eligibility to purchase the house and keep up the payments, what criteria should I use? What should I check for? Employment history? Rental history? I obviously should run a credit check, but how do you determine how bad someone's credit has to be before you absolutely have to say no?
Finally, what do I have to have written into the purchase contract to protect myself?
This is all new to me, and I'm kind of shaky about proceeding down this path, so I would like to hear of people's experiences, good or bad. If anyone has any advice to offer, please do!
I'm considering taking a new approach to try to sell my MH. I swore I would never consider selling it on a contract, but after two years and no sale, I'm ready to try anything. What I'm talking about is selling it on something similar to a land contract (I can't technically call it a "land contract", since the park owns the land), where the buyer would assume my payments with a nominal down payment. They would pay me, and I would pay my finance company. The initial note would remain in my name, but I would hold the buyer's note, and be on the title as a secured party. The buyer would assume responsibility for the monthly lot rent. I have had several inquiries from potential buyers looking for this type of arrangement, some admittedly coming from a bad credit experience. In the past, I have declined such inquiries, my philosophy being "If the bank doesn't want to deal with you, why do I?". However, maybe someone here has had a more positive experience going this route.
Some obvious concerns I have:
The most obvious - what if the buyer defaults? How difficult would it be to foreclose if I have to? I've heard that this process can take months. Has anyone had experience with this?
What if the buyer trashes or severely neglects the property? What are my rights in regard to repossession? The last thing I want to do is have to go in and do a bunch of restoration work because someone destroyed the house and/or defaulted on the note.
Since I am going to be the one who has to determine the buyer's eligibility to purchase the house and keep up the payments, what criteria should I use? What should I check for? Employment history? Rental history? I obviously should run a credit check, but how do you determine how bad someone's credit has to be before you absolutely have to say no?
Finally, what do I have to have written into the purchase contract to protect myself?
This is all new to me, and I'm kind of shaky about proceeding down this path, so I would like to hear of people's experiences, good or bad. If anyone has any advice to offer, please do!