As a professional Realtor in Michigan, we are often approached by people with troubled credit histories trying to break away from renting, and moving into becoming a homeowner. Land Contract Homes have an appeal because they bypass having to deal with a banking institution who would deny them due to prior unresolved issues holding down their credit scores.
However, an individual seller of a home might consider selling the home on Land Contract if the buyer can present to them a plan of action on how they will improve their credit during the period of the Land Contract, and eventually re-finance in 3 to 5 years into a conventional mortgage. The advantage to a seller is solely monetary in this arrangement, so the interest is usually much higher than current loans.
Some of the Land Contract arrangements I have put together in recent years have been between 8 to 11% interest, as opposed to the current fluctuating market interest rates between 3 to 5% in recent years. The reason for this difference is the seller assumes all the financial risk in real estate. They relinquish possession of the property to a person whom they do not know how they will take care of it, or how they will perform in the future on their payments. There is always the risk of having someone go into default, and then what?
However, by selling the home on Land Contract in the end will make them more money than if they sold it directly to a buyer with cash, provided the buyer does not default, damage or cause them to have to re-take possession of the home in the future.
The subject of Land Contract Homes therefore is a complex subject, but it is important for the economy. With some many people with struggling credit in the downturn of the economy on the last several years, there are millions of displaced homeowners and not everyone wants to rent. The dream of home ownership has taken quite a hit in the last decade.
So I wrote and published book that is now available in a Kindle eBook format on Amazon entitled: Understanding Land Contract Homes: In Pursuit of the American Dream. This book was written to help both buyers and sellers understand the subject of Land Contract Homes, as well as how they can be implemented for the benefit of both parties. I believe in win-win arrangements in every transactions, it this book will help both sides understand the responsibilities and rules they should agree to in such an arrangement as a Land Contract Home.