Despite the recent global phenomenon, the foreclosure rate in the residential real estate industry only experienced a slight increase. That’s mainly due to the homeownership protections implemented in many countries, specifically the U.S. However, just how long the foreclosure rate can be controlled depends on the duration of the crisis, and protections for the number of homeowners getting behind on their mortgage payments are still increasing.
If you’re one of those currently facing financial adversity, foreclosure is menacingly looming in the background for sure. So, what are your options when you (hopefully not) receive a pre foreclosure Long Island notice of default or wherever your property is located? As a start, you can choose to arrange backdated payments, negotiate a loan modification, or arrange a short sale. Most homeowners opt to put their property up for sale.
If you’re thinking about selling your house in pre-foreclosure to avoid any damage to your credit history but don’t know how to go about it, this pre-foreclosure home sale guide is for you:
- Figure Out How Much Your Distressed Home Is Worth
The first step is to determine your property’s value. The challenge of figuring out a home’s value, though, is that it’s subjective. This means that some people will value your property lower than others. The goal here is to find the sweet spot to attract the most potential buyers.
Here’s how you can educate yourself about your distressed property’s value:
- Know your property’s most accurate market value: The market value of a property, whether it’s under pre-foreclosure or not, is based on how much money potential buyers are willing to pay for it. Many homeowners planning to sell their property, though, mistakenly think that their home’s market value is based on their opinion of how beautiful their property is and their monthly mortgage payment. Believe it or not, others also believe that their memories of their home affect market value.
The truth is that a property’s market value depends on the following factors:
- The location of the property
- The size of the property
- Bathroom-to-bedroom ratio
- Neighborhood safety (e.g., low crime rate)
- Distance from schools
- Time of the year (homes sell faster and for more money during specific periods of the year)
- Sale performance of properties in your area with the same characteristics as yours
If you think you lack the fundamental knowledge required to establish a ballpark figure based on the factors above, don’t hesitate to ask for professional help. There will be more discussion on working with an expert later.
- Use online valuation tools: Another way to obtain a ballpark value for your distressed property is using home value calculators available online. All you need to do is provide the necessary information about your home. The valuation tool will then use it, besides checking public records, to estimate your home’s worth. Most online home value calculators return not only an estimate of the property’s value after taking information (like the address of your property) but also the following:
- Price per square foot
- Value history of the properties in the area
- Sales history of your property (if available)
- More details about your property (type of home, year the property was built, number of parking spots, number of bedrooms and bathrooms inside)
Many valuation tools online update regularly and are free and straightforward to use, even for non-techie homeowners. - Work with an appraiser: We’ve mentioned the importance of working with a professional earlier. One of the experts you can approach for help during the sale process of a pre-foreclosure property is an appraiser. Although an appraisal isn’t really required, it’s a good idea to have your property appraised if you’re still unsure whether you’re pricing your home correctly. A professional appraiser will visit your property and check your location to review recent sales in the area before providing an impartial, thoroughly researched value estimation of your distressed home.
- List And Advertise Your Property
After establishing the best price for your distressed home, listing your property and promoting it through different marketing channels would be your next step. The good news is that you don’t need to spend a significant amount of money on marketing your property in today’s digital world. That’s because potential buyers are already more proactive online; you only have to ensure that they’ll find your home at its best appearance fast.
Here are some effective practices for listing and advertising a property for sale:
- Hiring a professional photographer (hire someone who understands interiors, light, and architecture)
- Harnessing the power of social media (publishing organic posts and running paid ads using professionally taken photos of your property)
- Listing your property on as many listing platforms as possible
- Hire A Realtor
Other than working with a professional appraiser, you should also consider hiring a real estate agent. Realtors can be of great help, especially if your schedule is too tight to handle the listing of your distressed property on your own.
However, it’s essential to note that working with a real estate agent means you won’t be getting all the money you received from the buyer because most realtors work on commission. Nevertheless, real estate agents can make the sale process faster by doing the following:
- Guide you in identifying market value
- Give recommendations during the listing and marketing process
- Hold ‘open houses’
- Meet with potential buyers
- Coordinate with everyone involved in the sale process (appraisers, banks, lawyers, etc.)
Final Thoughts
If you’ve received a notice of default from the lender for your property and opt to sell your pre-foreclosure home instead, take the steps discussed above to make the sale successful. However, you can also consider cash home buyers if you prefer not to go through all those steps yet still want to sell your property fast. The decision is yours to make.