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Selling Your Distressed Home

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Millions of Americans are behind on their mortgage payments. The COVID-19 pandemic did nothing to help homeowners who were already struggling to keep up with housing payments and other expenses. If you’re among the group who are facing foreclosure due to missed payments, you may be wondering what options you have.

Selling a distressed home can be a little more complicated, but it’s not impossible.

What’s a Distressed Property?

When someone refers to a property as a “distressed home,” it typically refers to two things:

  1. A home that needs a lot of repairs and would (or could) not sell on the regular market without expensive repairs.
  2. A home that is on the brink of foreclosure or a property that is bank-owned.

 

Distressed properties are problematic because selling them on the regular MLS is often difficult, if not impossible.

What are repairs that could cause a home to fall into the distressed property category?

If your home needs significant repairs like those listed below, it may qualify as a distressed property. If you cannot afford the repairs or the house won’t sell without updating or repairing damages, the home is a distressed property.

Some repairs that could prevent a home from selling include:

  • Severely damaged roof
  • Very old windows
  • Septic Tank Issues
  • Termite or rodent damage
  • Foundation issues
  • Electrical or plumbing problems

 

The damages listed above can be expensive. If you’re already struggling to make your mortgage payments, affording these repairs may be impossible. Selling your home for cash may be a better option.

Why are homes nearing foreclosure considered distressed?

When a homeowner is behind on their monthly payments or the property value dips below what the homeowner owes, the home is considered distressed. The term distressed term refers to properties that need to be sold quickly to reduce loss. Banks or lenders will likely lose some money on a distressed sale.

What options do I have for selling my distressed property?

If you’re in a home that won’t sell on the traditional market and you’re facing foreclosure, you have a few options.

Short sale: Your lender must approve a short sale. In a short sale, the lender agrees to take an offer that’s less than what you owe on your mortgage. The lender may forgive the remaining balance or seek a judgment that requires you to pay the difference. A short sale will go on your credit report.

Foreclose: You can allow the foreclosure to go through. In a foreclosure, you may end up owing money after the bank sells your property. Some states don’t allow this, and you could walk away from foreclosure without having to pay any difference. However, a foreclosure will severely damage your credit for the next 10 years. Foreclosure is the nuclear option.

Get financing to cover your debt: This isn’t ideal if you’re already struggling to pay your mortgage. However, you may be able to take out a home equity loan (if you’re current on your payments and just need the funds to make repairs) or a personal loan. Taking on more debt is not a productive idea for many distressed homeowners, but it is an option.

Sell to Brick: We’ll help you get out from underneath your mortgage with a cash offer. Our goal is to help our customers walk away without owing any money so they can start new. We work home on a case-by-case basis and focus on each situation to ensure you get the best service possible.

Why should I sell to Brick instead of through a real estate agent?

Distressed properties may not qualify for a mortgage purchase, so you’ll need to sell to a cash buyer to avoid foreclosure. Properties on the brink of foreclosure and homes with severe damage are not an easy sell on the MLS.

If the homes have damages that could be considered health or safety risks, lenders will not approve a property loan. Property owners nearing foreclosure need buyers who can close fast (typically cash buyers) to avoid legal proceedings. Selling a home quickly on a tight deadline isn’t always possible. Your home could go into foreclosure even if you list the house for sale.

We are passionate about helping homeowners avoid foreclosure. We want to help homeowners move on from a very stressful situation as smoothly as possible.

Ready to sell your distressed property? Call us today, and let’s get started on your way to a financially free future.

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