Common Issues with Distressed Properties
Several distressed properties tend to be in poor condition. These conditions will not pass home inspections. As a seller, if your home cannot pass inspection, you will be required to address those issues prior to a sale. Conventional lenders will not lend on a home that cannot pass inspection. On the other hand, people who are in a financial crisis and in the midst of a foreclosure may not have the resources to bring their homes up to code. This is where a person may run into issues when selling on the public market.
Another consideration is dirty title. Homes in foreclosure tend to come along with title liens. Most liens are easily curable by the closing date. Usually, the amount to cover the liens will be taken out of the sellers proceeds from the sale. However, more complex liens, such as IRS liens, may complicate the sale process and unreasonably delay the closing date. This may raise some red flags for conventional lenders, potentially presenting another obstacle in the sale process. Speaking with a good title company can answer more specific questions regarding those issues.
Key takeaway:- Being a distressed seller may significantly reduce your buyer outlook due to strict buying standards imposed by conventional lenders.
- If your home is distressed, there is a possibility that this may take you out of the public market.
This is my forte! In cases where a homeowner is in foreclosure and there may be a possibility that their home is considered a distressed property, selling your home via an off-market sale may be your best option. More specifically, selling is the simplest and least time-consuming method to cure your foreclosure.
Even if your home is in excellent condition and appears ready for an MLS sale, timing in a foreclosure is crucial: the longer it takes for your house to sell, the riskier it gets. People in foreclosure who do not have legal representation are typically foreclosed on much faster than those who do. This is why acting quickly is so important.
Key Takeaways:- Selling privately to an investor accelerates the selling process.
- The faster you act while in foreclosure, the higher the rate of success you will have, and the more money you could potentially make from the sale.
- Selling will clear your entire obligation, allowing you to become free of the burden.