Six Lakes Realty

Should you Buy or Sell using Land Contracts in Northwestern Wisconsin?

Home Buying Northwestern Wisconsin

Land contracts are not common, but they are sometimes used in the sale of Northwest Wisconsin real estate. Here are the basics that buyers and sellers should know! (Please note, this is not legal advice.)

Land contracts are essentially a seller financing agreement. The terms of the land contract work much like a mortgage, except that it is a private financing deal between the seller and buyer. The interest rate, payment amount, and down payment is specified in the contract documents, usually written up by the seller’s attorney or real estate broker.

To help expedite these transactions, the State Bar of Wisconsin has a standardized contract called “Form 11 Land Contract.” Wisconsin-licensed real estate brokers may use the State Bar Form 11, but sales agents cannot.

For sellers, offering a land contract can attract a wider pool of potential buyers. A land contract can provide the seller with a profitable income stream during the term of the contract.

For the buyer, a land contract can provide financing when a typical mortgage may not be attainable, or affordable. Yet there are risks to both parties. 

Wisconsin law allows the buyer in a land contract to have “equitable title” to the property. In other words, the buyer is considered the new owner as soon as the land contract is completed. The seller retains a security interest in the property. So long as the buyer makes the land contract payments as agreed, all is well.

Things get sticky if the buyer stops making payments. Undoing a land contract is a legal process that can involve strict foreclosure. The seller can incur legal fees and court costs to regain full ownership of the property. The buyer, meanwhile, stands to lose all the payments they made during the land contract, as well as possession of the property itself. Any interim gains in market value would revert to the seller. 

Most often, land contracts are used in inter-family real estate transactions. But a land contract can be offered by any seller who has lien-free ownership of their property. Before you consider buying or selling Northwest Wisconsin real estate through a land contract, consult with an attorney and understand your risks.

Ready to buy or sell in Northwestern Wisconsin? Let us help! Six Lakes Realty is a locally-owned family business with over 45 years of experience. Contact us today for friendly, hometown service!

John Flor
Managing Broker
Six Lakes Realty
Office: (715) 924-4806

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