A mortgage can be a powerful tool for investors. It helps them buy a piece of real estate, usually a home, at a discount. That discount is the difference between the mortgage value and the selling price of the property. Investors who purchase properties at a discount are called discount buyers.
The mortgage is usually a lien on the property. That means the investor has a right to claim the property as collateral. That right allows the investor to pay for the purchase using the property as collateral.
That’s why this is such a powerful tool for investors.
But it’s also important to know how to successfully complete a mortgage sale. If you sell at a discount, you should understand the time and effort required to sell a property. Follow the steps below to successfully complete a mortgage sale.
What to Know Before a Mortgage Sale
- Make sure you’re interested in making a mortgage sale – If this is your first mortgage sale, you may want to consider other ways to purchase real estate.
- You’ll likely have to pay for the sale of the home – If the homeowner doesn’t want to sell, you’ll likely need to pay the homeowner to sell their home.
- You’ll need a broker to help you sell the home – A mortgage broker is a real estate agent who specializes in the sale of mortgage loans.
- You’ll need to hire a closing attorney – Your closing attorney will represent you throughout the mortgage sale process.
- Keep records, track the costs, and plan for the sale ahead of time – Getting ready for a mortgage sale is a good idea.
Set Up an Appointment
Contact the listing agent and schedule an appointment to discuss the home’s sale. Let the listing agent know you’d like to discuss the home’s sale, if the home is on the market. The listing agent will likely have the home’s value. This number is called the “as-is value.”
Discuss the home’s sale with the listing agent. Explain why you’d like to purchase the home. Be prepared to explain why you’re interested in purchasing the home and why it’s a good value for your investment.
Have the Home Sold
When you’re ready, have the home advertised. This is called “making a market entry.” This is usually done through an advertisement in the local newspaper or on a website such as Realtor.
You may also have the home listed with a real estate agent.
Complete the Mortgage
Once the home is sold and the mortgage paid, the mortgage will be recorded. Your mortgage attorney will oversee this process.
Your mortgage attorney will give the mortgage back to the lender. Then the mortgage will be released.
Now you’ll be able to close on the property.
Your final steps include getting the title insurance, closing, and escrow.
Your title insurance will protect you from any claims against the property. This is common for any property you purchase for $50,000 or more. Your closing attorney will handle the closing. This is when you and the buyer sign the closing documents and transfer the title to the buyer. Your attorney will handle all the legal paperwork.
Escrow is where the closing agent holds all the money for the transaction.
The mortgage sale process is complicated. It typically takes time and a lot of paperwork to complete the process.
Keep the mortgage sale process as simple as possible by keeping your paperwork organized and following the steps above.
Plan ahead and keep records of every cost so you have a better idea of what to expect.
Most importantly, have fun while selling a home!