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Can You Sell a House With a Deed of Trust? Find Out Now
The average house in the United States is worth around $507,000, and those who have built equity in their home can generate a substantial amount of income through selling it. However, there are sometimes roadblocks that prevent the sale of homes.
One of the most common is a deed of trust, and many people aren’t sure how to overcome this issue. So, can you sell a house with a deed of trust? Let’s explore the key information you should keep in mind when moving forward.
What Is a Deed of Trust?
A deed of trust is a legal agreement involving three parties:
- The borrower
- The lender
- A trustee
Instead of giving the lender full ownership of the property, the borrower transfers the title to a trustee. The trustee holds this title until the loan is fully repaid.
It acts as security for the lender, ensuring they have a claim on the property if the borrower defaults. Many people mistake a deed of trust for a mortgage, but the two are handled differently in a property transaction.
Deed of Trust vs Mortgage
Although similar in function, a deed of trust and a mortgage have some key differences. The primary difference is the involvement of a third party (the trustee) in a deed of trust.
With a mortgage, the lender holds the title directly. In a deed of trust, the trustee holds it until the loan is paid off.
Foreclosures differ based on whether you have a deed of trust or mortgage, with trust deeds typically leading to a non-judicial foreclosure process. Understanding these distinctions is crucial during the house-selling process.
Selling a House With a Deed of Trust
Yes, it is possible to sell a house with a deed of trust. While the property’s title is held by the trustee until the loan is repaid, you can still initiate a sale.
The key requirement is paying off the remaining loan balance at the time of the sale. Buyers may also explore the option of assuming the loan, but this requires approval from the lender. Navigating the deed of trust sale process often requires working closely with legal and real estate professionals to ensure smooth completion.
Who Holds the Title?
In a property transaction involving a deed of trust, the trustee holds the title. The lender does not have direct ownership, but they have a security interest in the property.
The trustee is responsible for transferring the title when the loan is paid or if foreclosure occurs. As a seller, it’s important to understand who controls the title to avoid any delays or confusion. Releasing the title to the buyer upon closing is a critical part of the sale.
Impact on Selling Your Home
Having a deed of trust does not prevent you from selling your house, but it does add a few extra steps. Before the sale can be finalized, the outstanding loan must be paid off. The trustee will also need to be involved to release the title.
Any remaining funds after paying off the loan go to the seller, just like in a traditional home sale. Being aware of how the deed of trust affects the sale helps you avoid unnecessary delays in the process.
Seller’s Rights
As a homeowner, your rights in a deed of trust arrangement remain protected, even if the title is held by a trustee. You’ll maintain the ability to sell your property or refinance your loan. However, the lender retains the right to foreclose if you default on payments.
It’s essential to understand your rights and obligations throughout the property transaction process to avoid complications. When selling your house, knowing these rights can help ensure a smooth transition.
Can a Buyer Take Over the Deed?
In some cases, a buyer may be able to assume the existing loan tied to the deed of trust. Leveraging this option depends on the lender’s approval and whether the loan terms allow for assumptions.
If the buyer is approved, they will take over the loan and continue making payments under the original terms. It can be a helpful option in a slow housing market, as it might make the deal more attractive. However, not all loans allow for this transfer, so a careful review of the terms is needed.
Paying Off the Deed
To sell your home, the outstanding loan tied to the deed of trust needs to be paid off. It typically happens during the closing process, where the proceeds from the sale are used to settle the debt. Once the debt is cleared, the trustee releases the title to the buyer.
Sellers should be prepared for this step to avoid any surprises at closing. Clearing the deed is a standard part of the property sale process, ensuring the buyer receives full ownership of the home.
Transferring Ownership
In a deed of trust arrangement, the transfer of ownership involves the trustee releasing the title once the loan is paid. The seller’s role is to ensure that all outstanding debts on the property are cleared before this can happen.
Afterward, the trustee transfers the title to the buyer, completing the sale. Following this process is straightforward but requires careful handling of all legal documents. Proper communication with the trustee ensures there are no delays.
Working With a Real Estate Agent
A real estate agent can help guide you through the complexities of selling a house with a deed of trust. From preparing the home for sale to managing communication with the lender and trustee, an agent makes the process easier.
They can also advise on any real estate trust issues that might arise during negotiations. Agents are familiar with the extra steps involved in selling a home with a trust and can help streamline the process. Their expertise is invaluable when navigating these unique property sales.
Potential Challenges When Selling
Selling a home with a deed of trust can present challenges that don’t exist in a traditional home sale. One common issue is ensuring the trustee is involved in the transaction at the appropriate times.
Additionally, some lenders may require additional paperwork or approval for the sale to proceed. These hurdles can delay the process, so it’s important to anticipate them. Proper planning and professional assistance will help minimize any disruptions.
Steps to Sell a Home With a Deed of Trust
Selling a home with a deed of trust starts with ensuring all loan obligations are met. Then, the trustee needs to release the title once the loan is paid off. After that, the property sale can proceed like any other.
Working with experienced professionals ensures you have access to all your property transaction options and avoid potential pitfalls. Clear communication will result in a smooth and successful transaction.
Finding a Cash Buyer
Working with a cash buyer is often the fastest way to sell a home, even with a deed of trust. However, not all cash buyers are created equal. Let’s take a closer look at what to keep in mind.
How to Evaluate Cash Buyers
Finding the right cash buyer is essential when selling a home, especially if a quick sale is your priority. Some cash buyers may offer less than the home’s market value, so it’s important to compare offers.
Take the time to investigate their reputation by asking for references or looking into their past transactions. A trustworthy cash buyer will have a proven track record and transparent communication.
How to Negotiate With a Cash Buyer
When dealing with a cash buyer, negotiations can be different from a traditional sale. Cash buyers are often motivated to close quickly, giving you more leverage to set favorable terms.
Focus on the details of the sale, such as closing timelines and any repairs or contingencies. It’s wise to get everything in writing and work with a real estate professional to make sure you’re protected. Being clear about your needs from the start can help avoid any misunderstandings later on.
Steps to Close the Deal Quickly
Closing a cash sale can happen faster than a conventional sale, but there are still essential steps to follow. Ensure the buyer’s funds are ready and available before setting a closing date. Working with a title company or lawyer helps move the process along smoothly and prevents legal issues from arising.
A quick inspection and appraisal, if required, should be scheduled as soon as possible to avoid delays. Once everything is in place, you can move toward closing and finalize the sale efficiently.
So, Can You Sell a House With a Deed of Trust?
The answer to “Can you sell a house with a deed of trust” is “sometimes” depending on the factors above. The info in this guide will help ensure you navigate the process appropriately, and you’ll have no issue overcoming the obstacles you face.
We Buy Houses Memphis offers cash for homes with no fees or hidden costs. Trusted by over one million homeowners, we close sales within a week or two, helping clients sell quickly.
Our guaranteed seven-day pledge ensures fair offers that all closing costs are covered within this period. You’ll learn more about how we can help when you get in touch with us today.
