What is a Real Estate Contract (REC)?
A real estate contract is used when someone sells a property and carries the financing for the buyer. The seller acts like a bank on behalf of the buyer. The buyer makes a down payment and then pays monthly installments to the seller until the contract (also called a seller-financed note) has been paid in full. Sometimes, the seller decides he’d rather have a single, lump-sum payment for the balance of his contract, rather than continue to collect monthly payments over time. This represents an outstanding opportunity for the investor, who can purchase the REC at a discount, and get a rate of return that surpasses current market rates.
