What Is a Land Contract in Real Estate?

A land contract—also known as a contract for deed or installment sale agreement—is a form of seller financing where the buyer makes payments directly to the seller instead of getting a traditional mortgage. The seller retains the title until the buyer pays the full balance.

💰 How a Land Contract Works

  • The buyer and seller agree on the purchase price, interest rate, and payment schedule.
  • The buyer takes possession and begins making monthly payments directly to the seller.
  • The seller holds legal title until the contract is fully paid off.
  • After the final payment, the seller transfers the deed to the buyer.

This arrangement is often used when buyers can’t qualify for traditional bank loans or when sellers want to offer more flexible terms to help a property sell faster.

⚖️ Benefits and Risks of Land Contracts

  • Buyer benefits: Easier qualification, flexible down payment, and faster occupancy.
  • Seller benefits: Steady income stream and ability to sell properties that might not qualify for financing.
  • Buyer risks: No deed until full payment, and potential loss of equity if a default occurs.
  • Seller risks: Managing buyer defaults and property upkeep during the term.

🏠 Land Contract vs. Traditional Mortgage

Both land contracts and mortgages allow buyers to purchase property over time—but the key difference is who holds the title during the process. In a traditional mortgage, the buyer gets the deed at closing and pays a lender. In a land contract, the seller keeps the title until all payments are completed.

📄 Why Land Contracts Matter for FSBO Sellers

For FSBO sellers, offering a land contract can open the door to buyers who might not qualify for traditional financing. Through Brokerless, you can still list your property on the MLS to attract more qualified buyers—even if you’re offering seller financing. MLS exposure ensures your property appears on Realtor.com, Zillow, and hundreds of local agent sites.

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