Mortgage Apartment Sale: Risks and Step-By-Step Process
Not every buyer has the opportunity to purchase their apartment for cash. Most often, he resorts to borrowed funds. Naturally, sellers are interested in the risks of selling a mortgage apartment, how not to be left without real estate and without money.
The sequence of the implementation of the apartment mortgage
The whole procedure of selling housing using mortgage funds is not all the participants in the transaction. In most cases, the realtors undertake all the work, presenting it as very complex and confusing. In fact, the whole process is strictly regulated by law, and the algorithm is designed so that even an unprepared person can figure it out. At the same time, all possible risks for both the seller and the buyer are minimized.
The procedure for selling an apartment through a mortgage is as follows:
- the seller and the buyer discuss among themselves all the details of the transaction, agree that the sale of the apartment will be carried out through a mortgage;
- to secure the transaction, the parties enter into a preliminary agreement, the buyer pays a deposit, a receipt for the transfer of money is drawn up;
- an apartment is valued by an independent specialist, it must correspond to the price specified in the main contract;
- the buyer sends to the seller those documents (originals or certified copies) that the bank will require – this is necessary to eliminate the risks of fraud on the part of the seller;
- after the approval of the transaction by the creditor, the parties enter into a basic contract between themselves on pre-agreed conditions;
- the contract is registered at the Multifunctional Center or directly at the Regpalat;
- the buyer takes an extract from Rosreestr that the apartment belongs to him, that is, a supporting document that a re-registration of ownership has occurred – the standard certificate is not issued in the Regal Hall anymore;
- with all the documents, the parties approach the bank, and the latter transfers the necessary amount to the seller’s account, and concludes a mortgage loan agreement with the buyer.
This procedure is the most simple and optimal, it is followed in large banks, for example in Sberbank. By following this algorithm, you can protect yourself from fraud and level all possible risks.
To ensure that the parties are sure that the transfer of money will occur on time, you can use several options of calculations. How exactly to make the transfer of funds, the seller and the buyer must decide for themselves, after weighing all the pros and cons. The most optimal are the following methods:
- Cashless using an intermediary. In this case, the bank. He will transfer the money directly to the seller, bypassing the buyer, as soon as he receives confirmation that the transaction has been successfully completed. To implement this process, the seller must have a bank account in the bank.
- With the use of a bank cell. In this case, the buyer cashes the funds received from the bank and lays them in the cell. The seller will get access to it as soon as he presents an extract from Rosreestr that the apartment belongs to the buyer, as well as a signed contract of sale.
These two methods completely eliminate the risk of non-receipt of money after the completion of the transaction. The buyer will not be able to refuse payment, since the transfer of funds will not depend on him.
What documents will be needed
In order to carry out a real estate purchase and sale transaction using mortgage funds, the seller will have to provide the bank with documents for the apartment to check the legal purity. These usually include:
- copy of the homeowner’s passport;
- apartment technical passport;
- cadastral passport with explication and an indication of the inventory value (not older than 5 years, otherwise you need to update it);
- certificate of ownership of the “house” or the corresponding extract from Rosreestr;
- the document on the basis of which the seller became the owner of the premises – a contract, will, warrant, etc .;
- extract from Rosreestr, confirming that the apartment is not mortgaged and not arrested;
- extended extract from residential offices, confirming that “problematic” tenants, for example, serving sentences in places not so remote, are not registered in the apartment;
- assessment of the cost of housing.
This list is based on the package of documents required by Sberbank. Perhaps, when contacting another financial institution, you will need to attach some more papers. It is better to know this in advance.
Many sellers are interested in whether there is a risk in providing documents for an apartment to third parties – for example, they often fear that the buyer or realtor will make a deal based on these papers.
In fact, this is impossible – without the signature of both parties on the contract of re-registration of ownership will not happen. But if there are doubts about the purity of the intentions of the realtor or seller, you can do this:
- provide only copies of documents;
- personally accompany the delivery of documentation to the bank;
- not to sign any receipts and instructions, except for the main contract of sale.
Delivery of documents can not be avoided – this requires the procedure for processing mortgage transactions in banks. The fact is that the seller’s apartment after signing the contract and transferring the money is secured by the lender, and he must be sure that the housing is legally clean and that its value corresponds to the market average. Otherwise, the transaction will not take place.
What risks does the seller bear?
It is believed that the biggest risk that the seller of a house or apartment bears is not receiving money from the buyer after the transaction is completed. However, in the case of a mortgage it is almost impossible for several reasons:
- the transaction is strictly controlled by the bank, and in most cases it will deal with the transfer of money to the seller;
- when depositing money in a cell or transferring it to a special checking account, they will already de facto belong to the seller, all that remains is to confirm the fact of transfer of ownership;
- in case of non-receipt of payment, the transaction in accordance with the current legislation may be challenged in court and declared invalid, and the seller will be able to safely return the apartment.
The risk that the seller will get fake funds, just as ephemeral, as mentioned above. If the money is transferred by the bank, they will be genuine by default. Even if the buyer transfers part of the funds in cash, they can always be checked right there in the bank on a special device.
Another risk that is more real is the bank did not approve the transaction
There are many reasons for this, but the security service does not usually deal with the distribution of comments, so it’s quite difficult to know what the problem is.
In this case, the seller risks only that he will have to return the pledge, because the transaction was broken due to the fault of third parties, and not the initiative of the buyer. It is unlawful to demand the return of collateral in a double amount, since the seller did not refuse his part of the agreement. Therefore, it is better not to spend the funds transferred to the seller as a pledge.
By the way, this is quite problematic, and if there is a chain of transactions, then this may put the seller at a disadvantage. Thus, speaking by a single agreement by the seller, in another case he is a buyer: for example, he sells an apartment to citizen A, and buys a residential house from citizen B. will require back your deposit. But the prepayment has already been transferred to citizen B for a dwelling house. Therefore, the seller will have to either explain the situation and ask for a deposit back, or pay citizen A from his own pocket.
Such a situation can be avoided if you do not transfer the pledge further down the chain until the bank gives approval for a mortgage. Of course, you can pull the time and find another buyer. But if the problem is in the apartment of the seller, then the situation will repeat. Therefore, you should check your apartment for legal purity in advance before selling, by contacting professional appraisers or realtors.
The procedure for selling an apartment through a mortgage is structured in such a way as to minimize the possible risks on the part of the seller and the buyer. If the funds are transferred directly by the bank or under the control of the bank, then the risk of non-payment or transfer of counterfeit banknotes is practically excluded. A more realistic risk arises if the bank has not approved the mortgage, and the seller has already spent the advance in one way or another. In this case, he will have to return the funds to the buyer from his pocket. Therefore, prepayment is better to hold.