- Selling your equity generally requires hiring a licensed real estate broker to solicit for buyers (purchasers) and to perform other necessary services.
Selling Equity Tips Landlord Real Estate Owners
- You may be uninformed about the fair market value of your home – this could expose you to unethical business practices.
- A knowledgeable real estate broker (active in your neighborhood and community) or an independent appraiser can assist you in estimating the current fair market value of your home.
- In California, licensed public escrows, title insurance companies, underwritten title companies, among others who either are licensed or expressly exempt from licensing as an escrow holder, are authorized to perform escrow services. These services include paying off your existing lender as part of the purchase and sales transaction. Avoid private transactions where a request/demand is made by the buyer/purchaser for you to sign papers in exchange for a cash payment (particularly without the use of a separate, third-party escrow holder).
- Unethical persons often attempt to persuade homeowners to complete informal transactions that provide “instant cash” or will offer to buy the homeowner’s equity using what the buyer/purchaser describes as a “contract of sale”. This transaction could ultimately result in financial grief. In addition to obtaining advice from a knowledgeable real estate attorney in transactions involving equity purchasers, transactions for cash to purchase your home by a person (including an entity) in the business of acquiring homes in foreclosure require advance review by your attorney. Advice from your attorney is necessary before entering into a “contract of sale” (a contract where title remains in your name and the deed is delivered at some later date to the buyer/purchaser).
- In typical purchase and sales transactions where the buyer/ purchaser intends to reside in the property, your real estate broker needs time to find such a buyer/purchaser for your home. Begin the marketing of your home as early as possible. You should keep your monthly mortgage loan payments current during this period.
- As long as this transaction involves a complete payoff to your lender or its servicing agent of your mortgage loan, it is not a “short sale”. The prior permission of the lender or its servicing agent is not necessary. However, there may be a prepayment penalty as part of the terms of your mortgage loan, charging you an extra fee if you pay off your mortgage loan early. You should negotiate with your lender or its servicing agent to waive this fee. Some prepayment penalties are contrary to applicable law, and a real estate attorney can assist you in this situation.
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