Selling your real estate as an owner-finance property can be a very lucrative choice. You can collect an interest rate much higher than what banks would charge, in addition to being able to reclaim the collateral property if someone falls behind on their payments.
There are thousands of people in Texas who need housing and who may not qualify for a traditional mortgage. You will likely have your choice of buyers when you offer a seller-financed property for sale in Texas. Unfortunately, not all of them will be able to fully follow through with their obligations after signing a contract with you.
A foreclosure can be very expensive and take a long time to complete. Is there an alternative solution you can employ as someone who offered seller financing?
You could execute a deed in lieu of foreclosure
Some people negotiating the sale of an owner-financed property will include a deed in lieu of foreclosure with the other closing documents. They will require that the buyer sign the deed for them to record if the buyer ever falls behind on payments or abandons the property. They can then record the deed and regain ownership quickly after a lapse in payments.
If you don’t already have a deed in lieu of foreclosure signed by the buyer, you could negotiate with them to sign it now. Provided that you have documentation of the missed payments, you may be able to talk with them about the consequences of foreclosure. If they realize that they will not be able to redeem the property, they may understand that recording a deed will put them in a better position to move on with their lives rather than fighting you and going through the formal foreclosure process.
Reclaiming your property requires a careful approach
Regardless of whether or not the buyers who have fallen behind on their payments want to cooperate with you, you will need to act carefully to protect yourself from later claims that you violated their rights or state law. Those intending to foreclose on an owner-financed property will frequently require support during that process to avoid unintentional violations of the law.
Learning more about the foreclosure process and the alternative options can help you efficiently resume control over a property where a buyer has failed to make payments.