For some homeowners facing foreclosure, selling is the way to go. The reasons are varied and each homeowner must decide which route is best for their financial situation.
If the sale is handled in a timely manner and produces enough revenue, then there will be no foreclosure on your credit report. If selling is the option you choose, there are several ways to go about it. Here are just a few of them:
- Real Estate Agent — Selling with a real estate agent is most beneficial if you are aware that you are in danger of foreclosure in the coming months. It isn’t the best option if you’re already in the midst of foreclosure, but it can be done. A realtor understands the market and the condition and pricing of competing homes. Top it off with the fact that realtors have a buying customer base, and you could see higher returns with more protection from a judgment for amounts over the selling price still owed to the original lender should the lender not write off and forgive the original loan in the case of foreclosure.
- For Sale by Owner (FSBO) — Again, while selling your house yourself is an option, there are some things you should be aware of before deciding that this route is for you. Some self selling homeowners are successful, but statistics show that only those who have done extensive research and understand the world of real estate enjoy such success. Still, it’s an option. If you do choose it, be aware that your home may not bring as much as you think it should and that it won’t be getting much exposure on the multiple listing services as these are reserved for realtors only. Since many home buyers use an agent to assist in locating a home, it is possible that your home will not be on the list to investigate for the buyer as payment to the agent usually consists of a commission written into the contract that does not include homes sold by owners. The situations for this option to be most viable include when the home is to be sold to a relative or close friend with whom arrangements for sale price and payments have already been made between the owner and the buyer. Otherwise, putting a sign out in the yard and an ad in the newspaper probably won’t bring quick enough results if you are in foreclosure.
- Lease-Option — A lease option may give some relief during foreclosure for those wanting to sell their home rather than keep their home. In this type of transaction, the buyer pays the seller money for the right to later have the option to buy the house. The lease option payment may be a substantial sum or it could be as little as one dollar. Then, a term is set up for the option to be able to be exercised. So, if the buyer and the seller agree to a one year option term, then no one but that buyer may purchase the property during that time frame. If the buyer doesn’t purchase at the end of the option term, it expires. Money exchanged in the agreement is nonrefundable unless other provisions were made between the two parties. Usually, option money doesn’t count for a down payment. A portion of rent typically applies toward the purchase price, as this agreement is similar to a lease purchase in many cases, but the buyer is under no obligation to purchase the house.
- Selling to a Investor — Selling to an investor is a very good option for selling your home to avoid foreclosure. While the price offered may be a little lower, investors are typically looking to gain access to the home almost immediately. This is due to the fact that investors are looking for a turnaround in which a profit can be made. Investors specialize in business transactions and making a profit. Often, the investor will offer enough to satisfy the loan on the house and to release the home owner from financial responsibility. The investor option is one of the quickest and most flexible methods of selling your home.
- Deed Your House — Deeding your house to another transfers ownership of the house, but not responsibility for the loan in most cases. In times when deeding your house becomes necessary to avoid foreclosure, the deed is normally signed to the lender. Most lenders will want you to try all other viable options first. Lenders aren’t real estate agents and don’t want to be. They would rather the loan be paid or satisfied in ways other than deeding a house to them.
- Short Sale — Short sales can be an extremely good choice for selling a home headed for or in the middle of foreclosure. This type of sale is really a negotiated settlement. It’s the best option if you find yourself owing more than the market value of your home and in the throes of foreclosure. There are no qualifying requirements of a short sale; and it is an easy process to begin yourself.