How much does it cost to repossess a home?
I am contemplating investing in real estate, and am doing some research on some creative ways to get financing on a home with little to no risk. All I really want to know, is how much is it going to cost someone approximately to reposess a home if the seller is financing the mortgage and not the bank, and the buyer stops making payments for whatever reason. Whether its a percentage or a flat rate or it depends on several different variables, I’d appreciate your help.
The term repossess is not the term you would use upon getting the collateral put up for a mortgage loan. The term used is called foreclosure. Repossess is something more used for lets say car loan.
There are two type of foreclosures used primarily in the United States
This would take a judge to accomplish this type foreclosure. You would appear in court with the necessary documents to prove that you would like to and have the ability to cause a foreclosure action against the current home owners. This is a bit more expensive and not really what they do in California, but the note holder as well as the home owner making the payments can request a judicial foreclosure.
This type of foreclosure is typically the process that is used in California its quicker faster and less expensive, and usually the process in which you would want to do the foreclosure. The procedure has been laid out and would need to be followed to the letter of the law. Making a mistake or omitting a procedure could cause you to begin again.
There are foreclosure companies that would do this chore on your behalf. You would need to find a few local companies to find out their procedures and cost. Some would defer the cost until after the foreclosure sale, and would take their cost out of the sale proceeds. Each company would be different and not have a set cost, though would be close in price. These companies are normally not a franchise. Most would charge a flat fee and would indicate this fee upon initial consultation.
You would not need the services of an attorney as the attorney would simply refer you to a foreclosure company. Many attorneys are not set up to handle foreclosures, even those that are real estate attorneys. Foreclosure companies would have an attorney on their staff for your use and to obtain legal advice from.
Before you do any type of owner finance you would want and need the help of a doc preparation company. These companies would prepare the mortgage loan docs on your behalf based on the information you would provide as to the interest rate, terms and any conditions, such as late fees, due date and grace periods, amount financed and other information that the state you reside in would require on mortgage loan docs. There is a fee for their services,however, you might pass some of this cost to the buyer. This is also a tax deductible item from your income taxes. One company that come to mind that would prepare your loan doc on your behalf is Magic docs.
There are many books available to you at your local library or for sale on Amazon or at your local bookstore. It would be to your benefit to educate yourself as much as you are able on this subject if you plan to use this method in selling your properties.
You would also want to know about selling mortgage notes and the procedures you would have to observe in the selling as well as the purchase of mortgage notes.
I hope this has been of some benefit to you, good luck.