What exactly is a contract for a deed?

Buying or selling a home is an exciting but undeniably overwhelming process — are you ready to tackle the tricky terminology? Let’s explore the definition of one of the most common real estate methods — a contract for deed.

Real estate terminology is often confusing, that’s why we’re diving into a more detailed explanation of the alternative method to purchasing a home known as “a contract for deed.” Read on to learn more about this common process, its benefits, and its disadvantages, too.

What is a contract for deed?

A contract for deed is a type of alternative real estate transaction and/or seller financing model that allows a buyer to buy a home or property without putting much (or any) money down. Instead, a buyer pays the seller (also the current owner) monthly until it is paid off.

The seller keeps the title to the home (often referred to as the deed) until the buyer has paid their debt in full. This type of transaction eliminates the need for a third-party (like a mortgage company or other financial institution).

What are the pros and cons of a contract for deed?

To determine whether a contract for deed is the right option it’s crucial to look at the specific circumstances of the transaction. However, there are some blanket pros and cons that should be considered before committing to this financing method.



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