When homeowners fall behind on mortgage payments–and the lender initiates foreclosure procedures–that property is safely said to be in distress. The process of repossessing a house from a borrower varies state by state, even county by county, but one thing is certain: barring a miracle, the home will be re-conveyed either back to the bank or to an interested buyer. When the lender completes foreclosure the owner suffers a blow to both assets and credit that is hard to recover from. Selling the property ahead of this, however, though also involving sacrifice, mitigates the worst effects of a completed foreclosure.
Step 1: Abandon Sentiment and Resolve to Sell
There is some bright news amidst the gloom for distressed home proprietors. New Jersey is known for the extensive length of its foreclosure process, over three years on average. Yet delinquent borrowers should not fritter away this time vainly hoping for rescue. This is the time to take action and three years can pass more quickly than assumed. Often, emotional attachment to a home can paralyze owners, preventing them from acting in their own financial interests. Shedding sentimental bonds is a necessary step in salvaging a decent future for self and family.
Step 2: Assess Property Value Realistically
Distressed properties frequently defy the standard hallmarks of appraisal. For instance, the high value seen in comparable properties may not apply to these houses because the same financial shortage that put them in delinquency with the lenders also prohibited timely maintenance and upkeep. Therefore, the house may need substantial renovation and repair. In New Jersey and elsewhere, foreclosed properties virtually always sell beneath the otherwise fair market value. The lesson here: insisting on normal valuation standards once the foreclosure process has begun is an invitation to lose the home with nothing to show for it.
Step 3: Develop a Buyer Profile
Needless to say, an owner with the urgency to sell should find a purchaser who is also highly motivated. A prime prospect is the house shopper who can not or will not pay a price that the house would otherwise command absent the pressing and critical circumstances. Secondly, a buyer worth doing business with is willing to make the repairs–or even reconstruction–that the seller can not afford. Furthermore, the optimal customer needs less financing for the deal and has more cash on hand. An opportunity for the best transaction generally comes from buyers of this sort.
Step 4: Consider the Short Sale
Although it will not enrich a seller, the short sale is a way of disposing of the property with all debts paid and discharged. This involves negotiating a lower balance owed with the lender thus allowing a lower sales price. The positive aspect is that–should all parties agree to the plan–the seller has shed the financial burden of a house under water. On the other hand, additional proceeds are few, often leaving the seller with little liquidity after all is said and done. Therefore, the decision for short sale has much to so with time and financial pressure.
Step 5: Contact Us!
As the calendar rolls on, that time threshold for selling gets smaller. A viable option is to reach out to a business like us that buys and sells distressed homes. Depending on the circumstances and number crunching, we as experienced investors can present a hard-pressed owner with a number of options, short sale being but one. We specialize in win-win scenarios for buyers and sellers, possessing the knowledge and contacts to make such results more likely. Call us anytime to talk.