What is a contract for deed commonly used for?

A contract for deed, also known as a land contract or installment sale contract, is primarily used to facilitate the sale of real estate when the buyer may not have sufficient cash for a large down payment. In this arrangement, the seller retains the title to the property while allowing the buyer to take possession and make incremental payments over time. As the buyer pays off the agreed-upon amount, they gradually build equity and eventually receive full ownership once the contract terms are fulfilled.

This mechanism is beneficial for buyers who may have limited access to traditional financing options, enabling them to purchase property and build up their credit history. The contract for deed arrangement allows buyers to invest in real estate even if they face some initial financial limitations.