What would make someone want to sell a house as a land sale? Is there any benefit? And is it the same?

Answer 1

As a previous poster mentioned the zoning can have a bearing on the sale. If it is zoned for a commercial use and you had a pre-existing use as residential then you would we be inclined to sell the property as commercial land. The home would have to be demolished. Also, if your home was in such bad shape that it could not be renovated then it would be a land sale. Another circumstance would be if your home was a small cottage in a neighborhood of all big homes; a developer would demolish the house and re-build a bigger home. This is a common practice where land is not available. The price of your property will not change unless the home is the best use for the property. If it is not it has no value due to the fact that it will be demolished and auctually cost the developer money to tear down the building.

Answer 2

I think you will get some confusion in the responses given the phrase 'land sale'.

Do you mean a sale using a land contract, contract for deed or land sale contract? The three terms all mean the same thing but none of thing while none of them mean selling just the land.

Land contact (LC).

The sale of a property (with improvements such as a house or just raw land as it does not matter) is a sale of the economic title and not the legal title. The seller still has rights that are stronger than they would have had if you paid all cash and they signed over the title.

The LC is mostly used as a form of seller financing. Many times the buyer has a down payment but can not qualify for a loan. Or the property has specific problems that make getting a loan a non-starter. In either case the LC will clearly outline what the buyer is going to do in terms of payments over a specific period of time. At the end the buyer will refinance, sell or otherwise find a way to pay off the debt. At that point the legal title is transferred from the seller to the buyer. The transfer might happen the same day the buyer turns around and completes a sale to a third party or it could be when the buyer gets a bank to provide a new loan (refinance).

The legal details vary by state. In some states the seller can more easily take back the property if the buyer fails to live up to the LC details. Closer to an eviction of a renter than a full foreclosure. In other states there is little difference so you do not see LC used there as often.

Every sale involves negotiations as to the terms and conditions. If I as the seller help you buy a property that you could not buy conventionally then expect that I will want something in return. A higher price, a better interest rate, help with my tax situation by using an installment sale, help selling a property that has a defect which you are going to deal with in some fashion. A little give and take until we are both happy with the deal.

If the buyer and the property qualify for a normal loan and I as the seller can sell with no strings attached (LC has strings) then I would not favor the LC when selling.

Answer 3

You have to look at the highest and best use of the land as vacant and improved. It the zoning has changed and the market in the house's neighborhood is changing then the land may be worth more vacant than with the house. For example if houses are being purchased and razed to build office or retail buildings then the value of the land will most likely exceed the value of land with an house on it. Also if a house has environmental hazards like asbestos or meth labs, then buyers would most likely want to build a new home on the land.