How to Sell Your Property Before the Bank Takes It
Obtain the permission of the mortgage holder., Find out how much your home is worth., Calculate the difference between what you owe and what it is worth., Decide if a short sale is necessary., Ask the mortgage holder if they’ll let you short sell...
Step-by-Step Guide
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Step 1: Obtain the permission of the mortgage holder.
You never know exactly what the mortgage holder will be willing to accept.
They have their own considerations, and they may accept something much lower or higher than you would have anticipated.
Facilitating a sale for the bank benefits them and the seller.If the mortgage holder does accept the offer, get their acceptance in writing, wait for the buyer’s financing to come through, and close the deal.
If the mortgage holder doesn’t receive any satisfactory offers, you run the risk of them reinitiating foreclosure.
Should that happen, see if the bank will simply accept the deed to the house--the deed in lieu of foreclosure.
It will negatively affect your credit, but not to the same extent a foreclosure will. -
Step 2: Find out how much your home is worth.
Whether you have to short sell your house or you can sell it conventionally, you need to find out the value of the home before anything else.
There is more than one way to go about it, but some methods are going to be more accurate or less expensive than others.
The easiest way is to compare your home to other recently sold homes in your area that are a similar size and in similar condition.
These days, there are a lot of sources for this information, including Realtor.com, Zillow, and Trulia.You can also hire a certified appraiser to make a detailed inspection of your house and come up with a more exact value.
Contact your bank to get a list of reputable appraisers in your area.If you use a realtor, the realtor will use their experience and comparisons with other houses in your neighborhood to set a value.
Over the course of the sale, using a Realtor will be more expensive than setting your own value or hiring an appraiser.
However, you very often get what you pay for, and selling a home with a realtor can be the most efficient way to do it. , Gather your most recent loan statement(s), take the value of what is owed on your mortgage, and subtract that amount from the value of your home.
If the number is positive, meaning that your home is more valuable than your loan, you’re almost certainly going to have to sell your house conventionally.
If it is negative, you may be able to “short sell” your home if the bank approves.
A short sale is a sale for less than what is owed., If you owe more than the house is worth and you can’t sell it for more than it’s worth, then you may consider a short sale.
A short sale is simply one where the sale price of the home does not cover the outstanding mortgage loan debt.
However, your bank may accept this as full payment of the loan if there is no other way for them to get their money back.
The downside is that they also may not forgive the debt, and require that you still pay the balance left over.
Short sales, even if accepted by the bank, will still be marked as "not paid as agreed" for credit purposes.
This means that a short sale might be as bad for your credit score as a foreclosure.
You may also owe taxes on the deficiency between the loan value and the short sale price., Since you don’t want to be stuck paying for a house that you don’t own or occupy, you need to get your bank’s permission first, so they forgive the remainder of your debt.When you ask your bank to short sell your house, make sure you have the following:
The current value of the house and the difference between the value and what you owe.
Tax statements verifying your income for at least the previous year.
Proof of your current income, like a paystub.
Any other pertinent financial documents, like a medical bill that makes your house payment untenable.
A letter outlining what your hardships are—whatever they are—and why you need to complete the short sale. , No matter what the appraised value is, a conventional sale will set the purchase price of the home higher than what’s owed on the mortgage.
If the housing market in your area is strong and the price won’t be too high to scare off a buyer, this might be the way for you to go—even if you owe more than it’s worth.Theoretically, you can make money selling a home even if it is in pre-foreclosure.
Of course, houses can sit on the market for a long time, so it’s difficult to predict whether you’ll be able to sell the house before the bank seizes it.
More likely, since you are in danger of the bank seizing your home, you’ve already tried to sell it conventionally.
If the home is worth more than you owe, and you haven’t been able to sell it, you’ll just need to lower the price more aggressively. , If your bank agrees to the short sale, they will insist upon you using a realtor to market the property.
Make sure to select a realtor who can market your home aggressively and has a proven track record of success.While your bank will pause the foreclosure process while you try and complete the short sale, they won’t hold off indefinitely.
That’s why it’s important to set a competitive price and market aggressively. , Once you have permission to short sell the house, the process of selling it is very similar to a conventional sale.
However, the short sale negotiations require a finer balancing act.
You have to be aware of the need to get the highest price possible, balancing that against the clock that’s ticking (usually 120 days) on the bank delaying foreclosure proceedings.
The higher the price, the more likely the bank will accept it.Short sales can take months to close, so make sure you have enough time before foreclosure to finalize the sale., A settlement statement is just written acknowledgement of the bank’s acceptance of the loan modification.
It states that you have satisfied the terms of the mortgage and are released from any further obligations connected to it. -
Step 3: Calculate the difference between what you owe and what it is worth.
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Step 4: Decide if a short sale is necessary.
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Step 5: Ask the mortgage holder if they’ll let you short sell your house.
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Step 6: Sell your house through conventional means.
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Step 7: Find a realtor.
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Step 8: Negotiate with the buyer.
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Step 9: Make sure you get a settlement statement from the lender.
Detailed Guide
You never know exactly what the mortgage holder will be willing to accept.
They have their own considerations, and they may accept something much lower or higher than you would have anticipated.
Facilitating a sale for the bank benefits them and the seller.If the mortgage holder does accept the offer, get their acceptance in writing, wait for the buyer’s financing to come through, and close the deal.
If the mortgage holder doesn’t receive any satisfactory offers, you run the risk of them reinitiating foreclosure.
Should that happen, see if the bank will simply accept the deed to the house--the deed in lieu of foreclosure.
It will negatively affect your credit, but not to the same extent a foreclosure will.
Whether you have to short sell your house or you can sell it conventionally, you need to find out the value of the home before anything else.
There is more than one way to go about it, but some methods are going to be more accurate or less expensive than others.
The easiest way is to compare your home to other recently sold homes in your area that are a similar size and in similar condition.
These days, there are a lot of sources for this information, including Realtor.com, Zillow, and Trulia.You can also hire a certified appraiser to make a detailed inspection of your house and come up with a more exact value.
Contact your bank to get a list of reputable appraisers in your area.If you use a realtor, the realtor will use their experience and comparisons with other houses in your neighborhood to set a value.
Over the course of the sale, using a Realtor will be more expensive than setting your own value or hiring an appraiser.
However, you very often get what you pay for, and selling a home with a realtor can be the most efficient way to do it. , Gather your most recent loan statement(s), take the value of what is owed on your mortgage, and subtract that amount from the value of your home.
If the number is positive, meaning that your home is more valuable than your loan, you’re almost certainly going to have to sell your house conventionally.
If it is negative, you may be able to “short sell” your home if the bank approves.
A short sale is a sale for less than what is owed., If you owe more than the house is worth and you can’t sell it for more than it’s worth, then you may consider a short sale.
A short sale is simply one where the sale price of the home does not cover the outstanding mortgage loan debt.
However, your bank may accept this as full payment of the loan if there is no other way for them to get their money back.
The downside is that they also may not forgive the debt, and require that you still pay the balance left over.
Short sales, even if accepted by the bank, will still be marked as "not paid as agreed" for credit purposes.
This means that a short sale might be as bad for your credit score as a foreclosure.
You may also owe taxes on the deficiency between the loan value and the short sale price., Since you don’t want to be stuck paying for a house that you don’t own or occupy, you need to get your bank’s permission first, so they forgive the remainder of your debt.When you ask your bank to short sell your house, make sure you have the following:
The current value of the house and the difference between the value and what you owe.
Tax statements verifying your income for at least the previous year.
Proof of your current income, like a paystub.
Any other pertinent financial documents, like a medical bill that makes your house payment untenable.
A letter outlining what your hardships are—whatever they are—and why you need to complete the short sale. , No matter what the appraised value is, a conventional sale will set the purchase price of the home higher than what’s owed on the mortgage.
If the housing market in your area is strong and the price won’t be too high to scare off a buyer, this might be the way for you to go—even if you owe more than it’s worth.Theoretically, you can make money selling a home even if it is in pre-foreclosure.
Of course, houses can sit on the market for a long time, so it’s difficult to predict whether you’ll be able to sell the house before the bank seizes it.
More likely, since you are in danger of the bank seizing your home, you’ve already tried to sell it conventionally.
If the home is worth more than you owe, and you haven’t been able to sell it, you’ll just need to lower the price more aggressively. , If your bank agrees to the short sale, they will insist upon you using a realtor to market the property.
Make sure to select a realtor who can market your home aggressively and has a proven track record of success.While your bank will pause the foreclosure process while you try and complete the short sale, they won’t hold off indefinitely.
That’s why it’s important to set a competitive price and market aggressively. , Once you have permission to short sell the house, the process of selling it is very similar to a conventional sale.
However, the short sale negotiations require a finer balancing act.
You have to be aware of the need to get the highest price possible, balancing that against the clock that’s ticking (usually 120 days) on the bank delaying foreclosure proceedings.
The higher the price, the more likely the bank will accept it.Short sales can take months to close, so make sure you have enough time before foreclosure to finalize the sale., A settlement statement is just written acknowledgement of the bank’s acceptance of the loan modification.
It states that you have satisfied the terms of the mortgage and are released from any further obligations connected to it.
About the Author
Jeffrey Powell
Enthusiastic about teaching hobbies techniques through clear, step-by-step guides.
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