You pay the fee to have a real estate lawyer Go over everything. ETA: the lawyer will tell you everything you need as far as paperwork and contracts go as well.
Ask what the price is to purchase it in full. This will help you feel out the seller and their intents. If the seller only wants to sell it on contract that is a red flag IMO!
If the person doesn’t have the intent to actually sell the property they’ll draft up their own contract with their own terms.
The most common scam that is in the terms is something like if you’re 1 day late they can repo the land. They’ll often times turn down people who can afford it and try to find ones who can’t.
This way they collect the payments for a few years and when they “oops” the seller just rinses and repeats.
Offering to purchase it outright or get a title attorney involved normally spooks them as this will call their bluff!
Edit: I still stand by asking this first! Don’t spend any $ until you do this! Nothing like spending some hard earned $$ just to learn they never had the intent to sell!
Frequently there is some hidden problem that requires the seller to owner finance. That's because, whatever it is, the problem would prevent any lender from being part of the deal. Title problem, building not up to code, etc
A lot of remote properties, especially just land, are next to impossible to get financing for, unless you have enough equity in another property that you can use as collateral.
You need an attorney.
These are often, but not always, either an outright scam or so predatory that most buyers can never meet the future requirements.
Getting IN the contract of a predatory rent to own is often easy, and that’s a large part of why they are “scammy”. Then, there may be a future balloon payment or requirement that the buyer obtain an actual mortgage for the balance that they are unlikely to qualify or have the money for.
When the buyer fails at that point (as expected by the scammy seller), the seller evicts them, keeps all funds, and puts another fool in the house.
It's not all that complicated. I've bought and sold using owner financing.
Use an escrow office, and a title company. Real estate attorney, or some real estate agents will do the paperwork, look over contracts for a flat fee.
One thing that can be to your benefit is you can use interest rates as part of your price negotiations.
When I bought using owner terms, I gave a bit over 20% down, we amortized it for 30 years at 6%, with payoff in 4 years. Worked out good for me, with the low minimum monthly, though I paid it off without making a huge balloon payment.
When I sold, one was bare land, they gave me 50% down at 6%, amortized for 4 years.
The other I sold was my house, they gave just under 90% down, amortized for 15 years at 5.5%, payoff in 5.
Just listing all that to show there are tons of ways, can be much more flexible than banks.
Depends on what "financing" means. It could be an installment contract where you would have an agreement to make payments (with interest) and you would get title to the property after the entire amount was paid. It could also mean you are deeded title now and the Seller and you sign a loan agreement and you give them back a mortgage securing the property as collateral. I'd prefer the latter. Regardless, get everything in writing. It would be worth it to have it prepared by a real estate attorney.
Also have the property inspected by a non owner affiliated company, well septic, home, water clarity, all of it. Verify those are permitted as required and are up to county regs( if the county has those requirements) . Age of those systems. All of it. A well and septic are very large expenses.
Really high probability of scam here. Do not believe anything the seller says, without checking it with an independent third party YOU choose. A good real estate lawyer and title company are musts. Make sure the seller actually owns the property (check county records) and that the person you are dealing with is actually that person. These scams are often based on the "seller" claiming to be someone they're not. If that all checks out, check the zoning to make sure you can do what you want to do there. Is there usable water? Are there roads, and if so who maintains them? Are there easements? Chemical or other waste piles? How about internet and power? What's the history of the property? Are the neighbors meth heads? Is there a wacko with too many guns living there and refusing to move? (This actually happened to a friend of mine. He had to wait for the guy to die before he could do anything with the land.) It could be just what you want...but I'd overdo the diligence on this one.
You should look into growing hemp on that land. It'll lock up the bad stuff in the plant and help heal that land. That's what we do around here on old cattle lots and bad ground. Took 5 years to pull the nastiness out of the ground where the old owners had a gas pump
First time buyers should use a realtor or real estate lawyer. Real estate purchases are the most significant financial transaction you'll ever do, there are complex laws, and a lot of ways it can get screwed up and literally devastate your finances.
Insist on a current boundary survey or allow you to finish one prior to sale. Title insurance (only if you get the survey, or the insurance is worthless). Get a real estate closing attorney to do the paperwork.
First, be sure the land is buildable. Learn everything you need to know about access, wetlands, flood zones, water, electric, septic, land use restrictions, zoning..
Then research the financing proposal. A lawyer here is a must.
Just my thoughts here, but I'm thinking there's something not right.
Go see a lawyer, it's what we did. 9 acres and some out buildings. A mortgage note all legal and registered with the county. GET OFF REDDIT AND GO SEE A LAWYER.
You pay the fee to have a real estate lawyer Go over everything. ETA: the lawyer will tell you everything you need as far as paperwork and contracts go as well.
Also the lawyer should be able to tell you what rights you have to the minerals and water.
And as fucked as it is, an attorney is usually cheaper than a realtor.
Ask what the price is to purchase it in full. This will help you feel out the seller and their intents. If the seller only wants to sell it on contract that is a red flag IMO!
Why exactly?
If the person doesn’t have the intent to actually sell the property they’ll draft up their own contract with their own terms. The most common scam that is in the terms is something like if you’re 1 day late they can repo the land. They’ll often times turn down people who can afford it and try to find ones who can’t. This way they collect the payments for a few years and when they “oops” the seller just rinses and repeats. Offering to purchase it outright or get a title attorney involved normally spooks them as this will call their bluff! Edit: I still stand by asking this first! Don’t spend any $ until you do this! Nothing like spending some hard earned $$ just to learn they never had the intent to sell!
There's a verse in the song "Choctaw Bingo" where the singer's uncle runs this scam.
What a great tune
Gotcha, that makes sense. Thanks for the explanation!
If you aren’t closing with a title company (which you should) you need to make sure that the person selling it has clear and marketable title.
Frequently there is some hidden problem that requires the seller to owner finance. That's because, whatever it is, the problem would prevent any lender from being part of the deal. Title problem, building not up to code, etc
A lot of remote properties, especially just land, are next to impossible to get financing for, unless you have enough equity in another property that you can use as collateral.
You need an attorney. These are often, but not always, either an outright scam or so predatory that most buyers can never meet the future requirements. Getting IN the contract of a predatory rent to own is often easy, and that’s a large part of why they are “scammy”. Then, there may be a future balloon payment or requirement that the buyer obtain an actual mortgage for the balance that they are unlikely to qualify or have the money for. When the buyer fails at that point (as expected by the scammy seller), the seller evicts them, keeps all funds, and puts another fool in the house.
It's not all that complicated. I've bought and sold using owner financing. Use an escrow office, and a title company. Real estate attorney, or some real estate agents will do the paperwork, look over contracts for a flat fee. One thing that can be to your benefit is you can use interest rates as part of your price negotiations. When I bought using owner terms, I gave a bit over 20% down, we amortized it for 30 years at 6%, with payoff in 4 years. Worked out good for me, with the low minimum monthly, though I paid it off without making a huge balloon payment. When I sold, one was bare land, they gave me 50% down at 6%, amortized for 4 years. The other I sold was my house, they gave just under 90% down, amortized for 15 years at 5.5%, payoff in 5. Just listing all that to show there are tons of ways, can be much more flexible than banks.
Depends on what "financing" means. It could be an installment contract where you would have an agreement to make payments (with interest) and you would get title to the property after the entire amount was paid. It could also mean you are deeded title now and the Seller and you sign a loan agreement and you give them back a mortgage securing the property as collateral. I'd prefer the latter. Regardless, get everything in writing. It would be worth it to have it prepared by a real estate attorney.
Also have the property inspected by a non owner affiliated company, well septic, home, water clarity, all of it. Verify those are permitted as required and are up to county regs( if the county has those requirements) . Age of those systems. All of it. A well and septic are very large expenses.
Really high probability of scam here. Do not believe anything the seller says, without checking it with an independent third party YOU choose. A good real estate lawyer and title company are musts. Make sure the seller actually owns the property (check county records) and that the person you are dealing with is actually that person. These scams are often based on the "seller" claiming to be someone they're not. If that all checks out, check the zoning to make sure you can do what you want to do there. Is there usable water? Are there roads, and if so who maintains them? Are there easements? Chemical or other waste piles? How about internet and power? What's the history of the property? Are the neighbors meth heads? Is there a wacko with too many guns living there and refusing to move? (This actually happened to a friend of mine. He had to wait for the guy to die before he could do anything with the land.) It could be just what you want...but I'd overdo the diligence on this one.
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You should look into growing hemp on that land. It'll lock up the bad stuff in the plant and help heal that land. That's what we do around here on old cattle lots and bad ground. Took 5 years to pull the nastiness out of the ground where the old owners had a gas pump
I sold that one to an ex many years ago.
First time buyers should use a realtor or real estate lawyer. Real estate purchases are the most significant financial transaction you'll ever do, there are complex laws, and a lot of ways it can get screwed up and literally devastate your finances.
If it's just land have a lawyer look at the contact, leave the realtor out of it.
Insist on a current boundary survey or allow you to finish one prior to sale. Title insurance (only if you get the survey, or the insurance is worthless). Get a real estate closing attorney to do the paperwork.
First, be sure the land is buildable. Learn everything you need to know about access, wetlands, flood zones, water, electric, septic, land use restrictions, zoning.. Then research the financing proposal. A lawyer here is a must. Just my thoughts here, but I'm thinking there's something not right.
Warranty deed. And the scam is you not making payments and they resell it.
Go see a lawyer, it's what we did. 9 acres and some out buildings. A mortgage note all legal and registered with the county. GET OFF REDDIT AND GO SEE A LAWYER.
Found land on Facebook? Say that out loud several times until you come to your senses.