Frequently Asked Questions about New Mexico Real Estate Contracts

Does anything change for my buyer? No! In fact, most of the time, your buyer doesn't even know that you have sold your contract. When Capital Creations LLC buys your contract, everything remains the same for the buyer. The only thing that changes is where the payments go.

Do I have to pay taxes when I sell my contract? This is one of those areas that Capital Creations LLC has to be careful about ... we can't give advice. You need to see your CPA. However, the opinion of the CPA's that we talk to agree that the discount involved in selling a contract is a capital loss, which can offset capital gains. It is best to talk to your CPA or accountant because each contract sale is unique.

Do I have to go to a closing when I sell my contract? No. Everything is generally handled by mail. If you are more comfortable with a closing at a title company, that can be arranged. It generally costs $250-$500 for a title company closing.

When is the best time to sell? That is a personal decision, of course. However, for contracts that don't require special considerations (such as very new, low down payment contracts), rising interest rates will decrease the value of your contract. If rates are rising, now is probably the best time. For "special consideration" contracts, waiting can often mean a better price. Please see the "Contract Value" series of articles in our "Newsletter" section.

What is a "Break Even Point" (BEP). Usually, there is a discount when you sell your contract. To calculate your  BEP, add all the cash you would receive from the sale of your contract PLUS the cash down payment you received at closing, PLUS the total of all the payments you have received. When this total equals the original sale price of your property, you are at the break even point. See the article in the "Newsletters" for more detail.

What if my buyer quits making payments after I sell the contract? From your standpoint, nothing. Once you sell the contract, you are done with the property and the buyer forever.