What Are Your Options When Facing Foreclosure?

At the height of the financial crisis in 2010, nearly 3 million homeowners went into foreclosure, according to a report from ATTOM Data Solutions who studies the U.S. housing market. While the country is on the road to recovery, there are still many families struggling to make ends meet when it comes to their mortgage payments.

We’re Not Out of the Woods Yet

The number of foreclosures has been falling since 2010, but you may be surprised to learn that there were still over 900,000 homeowners who went through a foreclosure in 2016. That’s approximately 0.7% of all housing units in the United States.

Why Foreclosure Is Such a Big Deal

No matter what type of mortgage you have, they all work the same way: the homeowner agrees to pay back the money they borrowed from the lender in full. But what happens if you are unable to do that? After enough time has elapsed, the home may go into foreclosure.

Foreclosure means that the bank or mortgage lender takes possession of the house and puts it up for sale (or auction) to try and recover some of the money that was lent out to buy the house. The homeowners will be forced to move out prior to the home being sold. The most obvious downside to having your home foreclosed on is that you no longer get to live in it.

While the loss of a primary residence can be disastrous for a family, there are other negative effects of foreclosure as well. Having a foreclosure on your Credit Report can severely affect your ability to buy a different home, as well as your ability to qualify for a rental property. Other lenders and property management companies may refuse to offer you credit after reviewing your credit history, or may charge a higher interest rate due to being a greater risk. It may take several years to restore your credit following a foreclosure.

Causes of Foreclosure

We can see that having a home foreclosed on by a bank is a very bad situation. But how does a homeowner get themselves into trouble in the first place? There are a number of situations that might cause a person to fall behind on their mortgage. Let’s talk about some common scenarios that can cause people to lose their homes. Usually it is not due to one single cause, but the result of multiple factors such as:

  • Job loss
  • Unexpected injury or disability
  • Unforeseen medical expenses
  • Death of spouse or partner
  • Divorce
  • Living a high consumption lifestyle
  • Having a high amount of consumer debt and/or student loans
  • Having little to no emergency savings fund

If more than one of these things happen within a short period of time, you may find yourself struggling to make the mortgage payment in addition to your regular living expenses. If you are already several months behind, you may be dangerously close to foreclosure. If you have made incomplete payments or stopped making payments entirely, the lender may consider you to be in default on the home loan.

Different Options for Avoiding Foreclosure

What should you do if you find yourself behind on mortgage payments and no options in sight? Whether you are one month or several months behind on mortgage payments, it is very important to consider all of your options before making a big decision. Let’s talk about some of the different choices out there.

Reinstatement – If you pay back the amount owed, you may be reinstated. This often comes with fines and fees though – plus you still have to come up with the money somehow.

Forbearance – If your lending company is kind, they may allow forbearance, where you can make smaller payments or no payments at all for a specific period of time while you get caught up. This is best as a temporary solution.

Another solution many homeowners don’t think of is selling their home to a private company. Organizations such as BuyMyHome can make a cash offer on your house, with fast closing times and no hassle for you! This can get you out of a tough situation with a minimal amount of stress.

Life can throw a curveball at us when we least expect it. If you are behind on your house payments or worried about losing your home to foreclosure, you may consider selling the property to BuyMyHome or following some of the other options listed above. Remember to stay positive and that you can find a way out and turn things around!

3 Different Options for Selling Your Home

There are a lot of reasons why a person would decide to sell their home. Maybe they want to be closer to work or family, maybe they don’t like the neighborhood anymore, or maybe they simply need a to downsize or upgrade their current house. But once you have made the decision to move, where do you begin? In this post, we’re going to discuss three different options for selling your home. So let’s get to it!

3 Options for Selling Your Home1). Hire a Professional Realtor

One of the most common ways to sell a home is to contact a local real estate agent in your area and ask for their help in selling your home. There are both pros and cons to this method, which we will discuss below.

Pros of Selling Through a Real Estate Agent

One positive aspect of hiring a realtor is that they bring a lot of expertise about home sales to the table. They will be able to perform an in-depth analysis of competing properties in your area, and provide an accurate estimate of the market value for your home. Don’t be surprised if this value is different from the estimated value shown on popular real estate websites such as Zillow®!

Realtors are also experienced in advertising and promoting your home for sale. They will photograph and list the home online, as well as print up flyers and may even host an “Open House” event to show the home to prospective buyers.

Finally, going through a realtor will save you the trouble of having to find a reliable Title Company, Notary, and other agencies as they likely already have preferred partners they work with.

Cons of Selling Through a Real Estate Agent

While there are several advantages to selling your home through a licensed realtor, there are also a few disadvantages you should be aware of. First and foremost, it is standard practice for the seller to pay between 5% to 6% of the home’s selling price in commission fees, which are split between the buyer’s agent and the seller’s agent. Many sellers do not rejoice in handing over a large check for these services.

Another disadvantage to selling through a real estate agent is that the traditional process of listing, advertising, and selling a home can take a long time. While many realtors indicate fast turn times of 30, 60, or 90 days, the time is never guaranteed. You might find your home sitting on the market for 180 days or more, meanwhile you are still responsible for the mortgage payments!

Finally, real estate agents will want to clean up a property in order to show it to prospective buyers. If you are still living in the home or you are selling a rental property that is occupied by tenants, you may not be comfortable with the idea of strangers touring your home!

2). Sell It Yourself Without a Realtor

A second option for selling your home is to simply do it yourself! There is no law that requires you to hire a realtor when selling a home (though some states may require a real estate lawyer or attorney to review the documents first).  Let’s explore some of the positives and negatives of this approach.

Pros of For Sale By Owner

The most obvious advantage of selling your own home is the money you will save by not paying commissions to a real estate agent. The savings can be significant! For example, a 5% commission on a $250,000 house is $12,500 – that’s money in your pocket if you choose to sell the home yourself!

Cons of For Sale By Owner

While selling your own home may sound appealing, it is not for the faint of heart. You need the energy, time, and knowledge to pull it off successfully. During the process, you may be surprised at how much work is actually involved, and the feeling of “I should have just hired a realtor” is quite common.

Selling your own home requires a lot of work, such as researching and pricing your own home, and being able to negotiate with potential buyers. You are also responsible for doing your own marketing and promotion. Generally, FSBO home sellers are not able to list their own properties on the local Multiple Listing Service (MLS) website, which severely limits their exposure to potential buyers.

Finally, selling your own home requires you to be extremely knowledgeable of the laws that govern real estate transactions. There are countless small details such as state-required disclosure notices, requirements for who must sign the papers, who can handle the actual transaction, not to mention finding a reputable Title Company, Notary Service, and a Real Estate Attorney to review the final documents.

3). Sell It to a Private Real Estate Company

One of the most popular options in recent years is selling your home to a private real estate company. We’ll  look at some of the pros and cons of this approach.

Pros of Selling Your Home to a Private Company

Private real estate companies will often specialize in certain types of home sales such as foreclosures, bankruptcy, divorce, inheritance, or other situations that necessitate a quick sale. They will be respectful of your situation and work with you to make sure the transaction goes as smoothly as possible.

Another key advantage is that the process can happen very, very quickly! Private companies are backed by investors who can make a cash offer for your home in days instead of weeks or months. A fast closing time is one of the biggest advantages that sellers look for, and this is pretty much as fast as it gets.

Finally, the whole process of selling to a private company is very convenient and easy. There are no walk-throughs, no open houses and flyers, no commission fees, and no hassle!

Cons of Selling to a Private Company

There are relatively few disadvantages of selling your home for cash. While it’s possible that going through a realtor or doing an FSBO sale could net you a few thousand dollars more than the cash offer, many sellers find the extra time and hassle involved to not be worth it.

If you are looking to sell a home in the Phoenix, Arizona area, consider going with BuyMyHome, a local home buyer that is able to make cash offers for virtually any type of property, including those in “as is” condition or needing repairs. Contact us today at: 602-883-4767.