That would also depend on your state laws as each state has different laws pertaining to foreclosures.
In my state it takes a minimum of 9 months to get the property back and that’s if everything goes through smoothly without the buyer trying to fight it. Otherwise at least 12 months or even longer if they file a BK.
You would have to pay attorney fees and court costs to foreclose. You would be able to get that added to any deficiency judgement against the borrower but then being able to collect from them is another story! If they file BK then you won’t be able to recover anything from them.
But the process is different in each state so you would have to look into that in your state as well.
I’m new to CREI and have one question that’s got me scratching my head. If I were to sell a house that I bought on terms, meaning I took back a mortgage for a given time at given percent. What would happen if the buyer fell behind in his payments? I’m guessing that I would have to forclose on the property? How does that work? What happens to me as the person holding the note? Is there a lot of risk involved with financing your buyers? I was reading the how to article “How to Create a RE Cash Cow”, and it talks about the Wrap around mortgage. I understand how the wrap works, I just don’t understand the risk associated with doing this (I guess the forclose process)? This wrap and owner financing seems like a really good way to sell your property FAST so any details on the risk would be great.
Thanks again CRE Online!!!
~Gary
You will have to check into the laws in your state pertaining to selling on contract for deed. Each state has different laws on this. Some states require foreclosing to get the property back while some only require eviction depending on how the contract is structured.
You can also sell on lease option which if structured properly only requires eviction vs. foreclosure since the buyer is only a tenant leasing the property with a separate option to buy VS. buying on a contract or carrying a mortgage.
Thanks for the info. I like the idea about just doing a lease option, however, just for the record, what is involved with a forcloser if I hold the note? As a seller do I get creamed with attorney feas and so forth? How does that process work? Thanks again JohnBoy.