Don't Get In The Mortgage Business

Janet says her mother-in-law died in February and her house is for sale. They have had an offer to sell it on a land contract or purchase money mortgage. What should they know about this before agreeing to it?

QUESTION: Janet on Facebook says her mother-in-law died in February and her house is for sale. They have had an offer to sell it on a land contract or purchase money mortgage. What should they know about this before agreeing to it?

ANSWER: I wouldn’t. Basically, you’re financing the loan. It’s a form of owner financing. If they don’t pay, then you’re going to have to go through the foreclosure procedure. If they don’t pay and take you into a Chapter 13 bankruptcy, then they’re not going to pay for an extended period of time. Then they’re going to pay what the court deems for them to pay, and you can’t go through foreclosure until you get them out of bankruptcy. You don’t need to be in the mortgage business. I would take less for the house to get the cash and walk away. If you’re going to take payments, why don’t you just rent it? “Well, because I don’t want to put up with tenants.” My point precisely. If you wouldn’t rent it, don’t sell it on a mortgage, because it doesn’t gain you anything. You just have a tenant. A glorified tenant is what you’ve got. I would move on. Move on to the next buyer. That would be my plan.