OfflineI'm ready to give this thing all I've got but I have a question that's preventing me from understanding how this works. Does someone have the right to sell me his/her property if they still have a balance on their mortgage? If they don't own it, or only have - let's say only a couple thousand dollars worth of equity - how can they accept any offer to buy their property? Thanks in advance for helping me to understand and move to the next level.
__________________
99.9999999999% of homes that are sold have balances on them so yes you can
Someone that sells a property with a mortgage balance have a obligation in the mortgage contract to pay the balance due on sale of property.This will have to be taken care of (paid off) so the lien is released and the buyer can get clear title. The property is sold with the buyer getting legal title to the property with the deed being the proof of ownership. The seller has the responsibility of paying the balance of the mortgage at or before the closing. The offer can be accepted because it is a contract when signed and some amount of money is put down. There is not the actual sale of the property until the closing (transfer of title , deed) Hope I've helped...Steve
"" Steve Rocks Real Estate ""
-- Central New York --
Thanks for the response Steve, but I'm still confused. I'm still missing it somewhere. If a prospective seller owes 60k on his mortgage and the property's he can still contract to sell the house but would still have to come up with the 60k at closing? My question is why would he or how could he accept an offer which is still going to leave him owing 10 or 20k which he doesn't have and/or can't get? He's facing foreclosure, lost his job and his credit is in the pits.
That's a good question, with several possible answers.
Like Elix and Steve said, most properties have mortgages on them. These mortgages are typically satisfied (paid off) at closing by the proceeds of the sale. However, there are some people that owe more on their property than what it can be sold for in the current market. In that case, either they have to bring cash to closing to satisfy the rest of the mortgage) OR pursue a "short sale" through the bank (where the bank agrees to take less than what is owed on the mortgage). Another way to purchase this type of property is doing a lease/option or buying it subject-to. Of course, you would only choose one of these if the numbers made sense as far as cash-flow or projected increase in FMV over the option period.
Hope that didn't make it more confusing, but really if you find the potential of a great deal, there are so many angles to approach it. (That's the fun of REI!
)
Good luck (and don't give up!!)
Rina
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
For a little about me, welcome to the site, and a few tips for new DG family members, click on this link: http://www.deangraziosi.com/user/3249
Seller could accept an offer which is lower than what is owed on the mortgage. This may be the only offer the seller will ever get. The lender would have to accept the lower amount as a short sale in order to release the lien on the title. The lender has to cooperate for it to work. The lacking amount owed to the lender will have to be forgiven. When someone is in pre foreclosure there could be a win win for the seller, the lender and the buyer when the lender accepts less than owed. (short sale)...Hope this helps...Steve
"" Steve Rocks Real Estate ""
-- Central New York --
Thanks everyone. I'm good to go now!
Jay