. . . an important question if you are the seller
So many people with poor credit want to know if they can do a Bond for Deed. The short answer? NO ….at least not with my sellers.
Although I am an advocate for Bond for Deed, the only buyer I would ask my seller to consider, is the buyer with relatively good credit, whose finance issues will be resolved in a foreseeable amount of time. For example:
- I set up a bond for deed for a client who had to wait for a bankruptcy to ‘age’ before they could get financing. What made the deal look good was that their current credit had been nothing but good since the bankruptcy … It’s all about being able to show the seller that it’s more of a timing issue, not poor credit.
- Another bond for deed was a woman who wanted to buy a house I had listed. She couldn’t get the lender to give her a mortgage until she sold her house in GA which was currently being rented…. Too much ‘debt to income ratio’. So a Bond for Deed was a perfect interim finance for her – and again, a timing issue, not a credit problem. She was finally able to sell the GA house and get permanent financing on her home here.
- I even had a buyer couple who both had good jobs, but NO CREDIT…. When I asked how they’d bought their last car, they answered, CASH. Now, cash might be king at the casino, but it’s not king at your local mortgage company. We put together a Bond for Deed. Then they each got a secured credit card. In no time they had established credit with the bureaus, and the third party escrow company also became a credit source for them…. In only a couple of years, they were able to get an independent 30-yr mortgage of their own.
Bottom line – the seller should not be expected to carry a 30-yr mortgage for a buyer. There needs to be a reasonable expectation that the buyer will be able to secure his own mortgage within a certain amount of time… usually no more than 36 months, 7 years at most.
If you think a Bond for Deed might be right for you, call me. I can help you draft an offer that should satisfy all parties, and I can recommend attorneys experienced in handling these types of sale contracts.