If you are planning to sell your home for the first time, the task may be quite emotionally challenging for you. And in case you want to sell the house after repossessing it during foreclosure, you might be looking for the best strategy to adopt. Well, that’s the very reason you landed on this page.
So, lets first get a bit familiar with what “foreclosure” actually means. When one has signed a mortgage agreement, it means he has agreed to pay back the loan to the lender according to the decided terms and conditions.
In case the borrower fails to make the monthly payments, the lender can seize the property, repossess it, and sell it to another buyer to compensate for the loss. As the borrower has breached the contract, the lender can legally obtain ownership of the house.
What strategy shall I adopt?
So, you belong to the second party, that is, the lender, and you want to sell your house so that you can recover the mortgage losses you faced due to the inability of the borrower to make payments. When a foreclosure is about to occur, you don’t have the only option of re-selling.
There are a few other options to consider as well that are in the best of interests of both parties. The reason you might want to consider the alternative options is that a foreclosure is a very time-consuming and expensive process. You can offer three options to the borrower, which include refinancing, forbearance, the repayment plan, or loan modification.
However, selling your home in such a situation is a recommended option, especially if you want to recover the mortgage balance. The first question that strikes your mind must be: Shall I sell my home directly through cash or do I go for an agent?
Well, both options are worth consideration. Let’s go through each option in detail so you can decide what’s the best strategy for you.
Hiring an agent to sell home
Selling your home on your own seems to be a tempting idea as real estate agents demand a handsome commission for helping you out. An agent will charge around 5% of the sale price of the house, which makes a large sum of money. So, many of us feel hesitant to let go of that money and are eager to sell our home on our own.
The main point is that you must not sell a home during foreclosure on your own if you have never done it before. Selling and buying houses or properties involve several pitfalls, you might not be aware of.
On the other hand, an excellent real estate agent will deal with all such pitfalls and problems in a professional way. Moreover, an agent will help you set a competitive price for your home after proper market analysis and handle all the paperwork smoothly.
Here, you must be mindful of the fact that during foreclosure, houses are sometimes sold at lower prices than the market value. People sell foreclosed properties at more economical rates, probably because of the poorly maintained condition of the house or due to the urgent need for loss recovery. Whatever your reason may be, hiring an agent will save you from a lot of possible hurdles you may face in the selling process.
Your agent will be better at negotiating with the buyers for the price and will end up selling your home at a much higher price. Moreover, the agent will make sure that the deal, transaction, paperwork and everything else goes smoothly and quickly.
Still not willing to hire an agent for selling the foreclosed home?
You can consider doing it yourself. Read on and then decide which option suits you best.
Selling home on your own through cash
Selling your foreclosed home on your own -the second option you have, and not a bad one. So, you don’t want to hire an agent? That’s okay! You can sell it on your own. Well, I mean, there is no rocket science in selling your home through cash all by yourself. That’s what lots of people do and do it quite well.
The very first thing to keep in mind is that you must do a proper market analysis. Check the prices at which the houses are recently sold in your area, especially the ones under foreclosure.
Carefully set a competitive yet attractive selling price. If you price it too high, you might not get many buyers then. I understand that your home might be of much more worth to you that it is to other people. But it would be best if you were realistic while setting the price. Try to tone down the emotional connection you feel for your home and think it’s just a business.
For getting maximum buyers, don’t forget to add your home to the Multiple Listing Service (MLS) in your area. MLS is a database system that connects home sellers with buyers in which brokers place the information about properties for sale. You are the one responsible for marketing your house and negotiating the home sales.
If you feel it requires too much time and effort, you can take help from a real estate attorney. Hiring a real estate attorney is a good bargain as it won’t cost you much, and you will smoothly get through the entire paperwork and transaction with ease.
Always expect that the potential buyer will negotiate on the price and try to get it down. So, you must know the trick of satisfying the buyer and getting the fair price at the same time. The first strategy set a price lower than the market value intending to attract the maximum of buyers. When there are many buyers, you will have the option to sell your home at the highest bidding price while refusing the ones with low bids.
The second workable method is to set prices in a way that there is already some room for negotiation, that is, set a higher price. During the negotiation, you can agree to lower the cost, and the buyer will consider himself on the winning side. So, you will get a fair price for your foreclosed home.
We hope, by now, the decision will be easier for you.
Best of luck!