Selling a distressed home presents different challenges than regular home sales. When property is in excellent condition with no financial or legal problems, home sellers maximize value with patience and listing on the open market to find buyers using conventional mortgages. Distressed property is not the same. Foreclosure, vacancy, repairs and violations, place houses at risk and necessitates that home sellers consider alternatives to the traditional home sale.
Avoid these three pitfalls when selling distressed property.
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Delaying The Sale. Listing on the open market is the best strategy for houses in great condition with no foreclosure or other re-possession proceedings pending. The reality is, however, a traditional sale through the local MLS takes months if not years. Distressed home sellers don’t have that kind of time. Once a homeowner defaults on their mortgage, a ticking clock begins running towards bank foreclosure. Homeowners that wait too long lose their home to the bank, and delay prevents the homeowner from exploring alternatives to foreclosure, including fast cash sale, short sale, loan modification, negotiation of a payment plan, deed in lieu of foreclosure, lease/rent, and bankruptcy. Similarly, unpaid taxes can result in losing your home in a tax deed sale.
Unwarranted delay has severe consequences when a house is distressed by “problem tenants” or squatters. “Problem tenants” and squatters damage the home, resulting in thousands of dollars of repairs. Property damage worsens as time passes. Property is at high risk of squatters moving in if vacancy persists. Homeowners put themselves at risk of lawsuits if they cannot monitor their property for safety hazards. Cities often fine home sellers whose property is in bad condition for violation of local code. Unaddressed fines add up to thousands of dollars (sometimes more than the home’s value). Homeowners that cannot manage the property (due to living far away or other personal reasons) should sell before the property becomes distressed.
Misunderstanding The Property’s Value. Distressed home owners often misunderstand the value of their property, resulting in failure to sell their home and costly delay. In valuing your South Florida house, home sellers need to evaluate comparable properties in the local geography, considering living area, lot size, bedroom/bathroom, etc. However, the usual valuation techniques don’t apply to distressed property. Distressed property regularly needs substantial repairs. Homes with non-cooperative tenants or squatters cannot be “shown” to prospective buyers either due to refusal of access or risk of physical safety. Regular home buyers using conventional mortgage financing do not qualify for distressed property, driving down home value by principles of supply and demand. Top sales value seen in comps result when homes patiently sit on the market for months, something homeowners cannot afford with distressed property. For these reasons, distressed property value is lower than that seen in nearby comps on Zillow or Redfin.
Contracting With An Unqualified Buyer. Not just anyone can buy a distressed property. Home sellers need a “cash buyer” when the distressed house does not qualify for conventional mortgage financing. Ask prospective cash buyers for proof of funds – something House Heroes LLC always provides. Further, not all cash buyers are created equal. Repairs (or evictions) that accompany distressed property scare buyers into canceling their contract when they realize they cannot handle it, wasting the precious time and money of the seller. House Heroes LLC buys any home in any condition, no matter the repairs or situation. In evaluating whether a cash home buyer is capable of buying a property for cash, make sure to look at their testimonials, contact the buyer directly to inquire about their experience, and make sure they are local (not a national “We Buy Houses” chain not familiar with you area). Don’t gamble your property with an unproven cash buyer. House Heroes LLC buys houses fast for cash, with the testimonials and experience to prove it.
We Buy Houses!
Just Fill Out This Form For Your FAIR Cash Offer.
