Carrying a Contract

[LuckyRobin]

Someone expressed interest in our old house today that we haven't put on the market yet because it needs several repairs. They are interested in buying it as is because they are handy, but they want us to carry a contract for them instead of a bank. Is this ever a good idea? What are the liabilites involved in doing something like this. Or should we run for the hills at the very suggestion?

[irmanator]

I wouldn't because if the bank wont loan them money they probably can't afford payments or they are a credit risk.

[snafu]

We bought our 1st home with an 'Agreement of Sale,' with the loan held by the owner. It was a great deal for them given how amortization tables work and we didn't have all the closing costs, fees etc. with the traditional mortgage. The paper work was done by our lawyer and the owner maintained a lien until we sold to move to another city.

I suggest your decision be predicated on the buyer's employment, credit rating & FICO score, your ability to carry the mortgage over X years, the down payment raised by the buyer and private mortgage insurance whose premium is paid by the buyer with you as beneficiary. The terms and conditions must be straight forward and spelt out. A late payment has immediate, legal consequences.

That would be balanced against your continuing with your plan to make needed repairs, list with an agent and sell the house as planned. I wouldn't give financial points for the buyer controlling the time table. I would give credit for not paying realtor commission.

[LuckyRobin]

Yeah, I didn't think it was probably a good idea.

[MrPolarZero]

It would definitely be a bad idea, since you have no guarantee on this one. But you might be able still find a better arrangement.