Expert: Matt Heisler - 2/11/2011

Question
QUESTION: We want to seel our home and carry the paper ourselves...home is on Cape Cod...if we seek a lawyer and are specific about when the payments are due and they default...will it be difficult and expense to get the house back and have them evicted.

ANSWER: To secure a loan against real estate, you'll need mortgage. To get the asset back, you'll have to foreclose, and foreclosure laws are very difficult in mass. I just read that the average foreclosure time in ma is about 580 days- almost 2 years. Personally, if you aren't making 10% on that paper I wouldnt consider it, I think there are much better uses of capital in the real estate market.

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QUESTION: Thank you and your advice is well taken...have you any ideas that help us leave our home in relative safety as I know mothing is always safe...would lease with an option to nbuy be easier and less hazerdous...also thinking abouit renting to Section 8?

ANSWER: Hello:

Without seeing the property, and without discussing with you the various options to consider the benefits and risks of each approach, it's very difficult to come up with recommendations for you.

However, it looks to me like you planned on selling the home.  Why not sell it and just use convention financing?  That seems to be the most straightforward solution to me.  

Matt Heisler
http://www.homesellinginmass.net

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QUESTION: Selling was our last option as the market is really sluggish and will be so until the banks begin lending...we are finding it difficult to keep up the house and have found a wonderful new life in Mexico...not getting any younger and really want out but unfortunately we have a $1000/mo mortgage...an acre of land on The Cape and a 1250 sq ft home in pretty good shape...unable to life in two places at once with that mortgage.

Answer
OK....

First, the market is a bit sluggish, but it's not a reason to sit on a house you can't afford.  In Dennis under 500K, the active/to solds ratio is 74/50.  Not ideal, but not terrible either, especially in February on the cape. Also, rates won't stay where they are, and the market could be as good as it's going to get for some time. If you paid too much you could consider the short-sale route as well.  If none of those options are feasible, I'd rent - vacation rentals if possible and furnished and regular tenants if not.  If you're just trying to wait out the market, you don't need to be cash-flow positive, just enough to take the bite out of $12K a year.  Rent it for $800/month and you'll only be out $2K.

It really depends on what is the easiest solution for you.  If you're going to be in Mexico, I would seriously consider selling, as long distance tenancies can be difficult and expensive.  Logistics are important for part=time landlords.

Matt