Certified Residential Appraiser Practice Exam

In a Contract for Deed, what does the purchaser provide to the seller?

1. Emergency fund for repairs

2. Small portion payments until the purchase price is settled

3. Full payment at the start of the contract

4. A guarantee of future payments

The correct answer is: Small portion payments until the purchase price is settled

In a Contract for Deed, the purchaser typically provides small portion payments over time until the total purchase price is settled. This arrangement allows the buyer to make a series of payments to the seller, rather than requiring full payment upfront. This method can be especially beneficial for buyers who may not have sufficient funds to pay the entire purchase price at once or who may find it difficult to secure traditional financing through a bank. The Contract for Deed serves as a financing arrangement where the seller retains title to the property while the buyer makes incremental payments. Once the buyer has completed all required payments under the contract, they receive full title to the property. This process can also indicate an element of trust between both parties, as the seller is, in essence, extending credit to the buyer based on their agreement to fulfill the payment terms.