That's not enough to avoid the risk

>> if seller has enough equity on the property, It is very unlikely he will walk away.

oh, really?

How comes so many investors who bid properties successfully from auction? It does happen that many owners have considerable equity, but walk away from properties.

If you are a buyer on a land contract, you must insist to pay lender/tax/insurance/HOA directly, and pay the rest to the seller. This is the only way to make sure lender, etc. are getting paid and you don't lose property if the seller is not a responsible party. Also you must record the land contract immediately after execution to prevent the seller to sell the same property to somebody else.

As a seller of land contract, you are also taking huge risk. Review buyer's financial is not enough because it can change at anytime. Also if buyer is perfect in his financial, why not he buy property in a traditional way? 99% of land contract buyer cannot get conventional mortgage due to their own financial/credit problem so that they have to seek alternative way.

For seller, due on clause is a REAL risk. Unless you take advantage of buyer who knows nothing about RE, and did not record the land contract, lender can easily find out that you have sold the property in land contract, and they can call due on clause at anytime. Yes most lenders choose not to do it as long as you pay mortgage on time. But it is still a risk. The bottom line is that you must be able to handle this risk, i.e., has financial muscle to pay it off just in case, or afford to lose the property. Otherwise you are just gambling.

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• Agree with your point -monkeyboy- ♀ (1608 bytes) () 12/25/2011 postreply 12:11:32