All Forum Posts by: Ethan Dominguez

@Ethan Dominguez - You can pay for an appraisal by contacting a licensed real estate appraiser in your area. But it will cost you about $600 and is probably overkill at this point. It's much more common to have a real estate agent give you an opinion of value based on comparable sales in the neighborhood (or look them up yourself and run your own numbers). 

When a home is sold with bank financing, the appraisal gets ordered by the lender, at the buyer's expense, as part of the underwriting process. 

They have a mortgage, and it works very similar to a typical mortgage from the bank. It just happens to be held by an individual (the previous owner) rather than a bank. 

If they sell the house, their mortgage to the previous owner must be paid off to remove the mortgage lien on the property.

So, as long as the value of the property exceeds the debt on the property, they have equity and can sell or refinance and pay off the original seller-financed mortgage. 

One consideration is whether their mortgage included a pre-payment penalty (an if so, for how long)? You said it has been several years, so this may no longer be a factor. You should be able to find a copy of the recorded mortgage in the public records. 

Beyond that, whether their current mortgage is with Sammy Seller, or with Bank of America, the process is exactly the same: 

Let's say the home is now worth $150,000. The current owners bought it for $100,000 and put 20% down with an $80,000 mortgage, and after paying down the mortgage for 8 years, they owe $65,000 on it. 

If they sell the house for $150,000, the outstanding mortgage balance of $65k must be paid off (it makes no difference whether the mortgage is held by Sammy the previous Seller, or Bank of America, or Regions Bank, or Hard Money Joe - the lien must be paid off in order to give free and clear title to the property in a sale. 

The title company or attorney closing the transaction will request a payoff statement from the lender as of the closing date, and shortly after closing, they will pay off the mortgage and have the paid-off lender sign a Satisfaction of Mortgage, which basically states, "I'm all square and I relinquish my mortgage lien on this property". 

None of this impacts their ability to sell the house, or your ability to wholesale it,