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Purchasing From An Individual

by Rebecca D.
(Amarillo, TX)

So, where do we start? I currently am looking to buy a home for the first time with only $600 dollars down.

I contacted a guy who told me he had a home the lady was about to turn back in to him that I could purchase and he would work with me.

He said he doesn't deal with banks. This is a great opportunity since I have lived with others all my life and I am 32 years old and just had a stillborn daughter.

I prefer to be at a house that I never have to move from again. I have no idea what questions to ask. I have already printed the information on this location and have seen it from the outside and its perfect from what I have seen.

Full privacy fence for back yard with two sheds, full wrought iron fence in front, gate closes at driveway , garage. I have not seen the inside but it doesn't matter to me at this point I am ready to have my privacy. Please help me understand my rights and how this purchase is different from a bank.

Thank you,



Hello Rebecca,

Thank you for coming to my website and asking your questions. I must say your question is a little out of my expertise, however I will share what I know.

The seller is willing to act as the bank rather than you going out and getting a mortgage. This can be a good thing, but it does have its drawbacks.

As far as the plus side, you do not need much to qualify for the loan. It appears you can get in with as little as $600.

Since the seller is going to hold the note, he can set the terms. So a low down payment and a higher interest rate is what you may expect to see. Since the seller is taking all the risk, do not be surprised if he ask for an interest rate 3-4 percent higher than the market rate.

In some states, this is called a land contract. Be sure you ask for a copy of his contract and have it reviewed by a local lawyer. You want to make sure it meets your state guidelines.

Also, you want to be sure this contract gets recorded at your local register of deeds. If you fail to do this, the seller can take back the house anytime he wishes since there is no recorded deed or sale contract.

I hope this makes sense. I know this can become a problem because I know of a case where the people who were living in a house and paying on a seller financed contract that was not recorded. The seller failed to pay the bank and the bank came in and repossessed the house and they lost all the money they paid on the house for several years.

I wish you the best. The most important thing I can say is to have your transaction reviewed by a lawyer when you are not using banks or real estate professionals.

Kind Regards,

Jeff Ragan

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