Distressed Home Sale Management
For Agents
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Just because a homeowner is in default on their mortgage or facing financial difficulties doesn’t mean that they automatically need to do a short sale on their home.
In today’s markets around Washington State, many homeowners are in default and potentially facing foreclosure but their home is NOT underwater.
These homeowners likely have equity in their home and need to sell quickly via a distressed sale to preserve their equity.
Distressed sale homeowners are facing many of the same challenges that homeowners who are underwater face:
- Behind on payments and afraid that any day the bank will foreclose on them
- On the verge of missing payments and unsure of how to move forward
- Overwhelmed with mail and phone calls from their bank offering confusing and conflicting options
- Bombarded with offers from “investors” or people who want to “buy the home for cash” but it may be hard to decipher what offers are legitimate
- Wanting to sell the home but not knowing where to start
I can’t tell you how many homeowners I work with who have equity in their home and often don’t know that – if they’ve been in default for over a year and don’t pay attention to their property value, they may not even know that they can sell their home and pocket the proceeds.
If you are working with a seller who is in default and/or facing foreclosure, there are many moving parts that need to be monitored, tracked, and dealt with that you don’t encounter with a non-distressed sale.
Consider hiring a Distressed Home Sale Manager to assist the seller with the following:
- Advise on the timing of the sale and track the foreclosure timeline. You need someone familiar with foreclosure procedures to monitor how long the seller has to sell the home before it goes to auction. You also need someone to manage the timing of your sale against the timing of the foreclosure.You’ll need someone monitoring how long it will take to bring in an offer, how long it will take to close the transaction and how long you have to complete the sale.
- Monitor when the home is set to receive a public notice of foreclosure. If possible, you want to sell your client’s home before information about their foreclosure goes public. This will help your negotiation position with potential buyers. If buyers know that the seller is facing foreclosure, they may offer less for the home as they will know they have to sell. Your seller will be in a better negotiation position if the sale closes prior to the public notification of the sale.
- Advise on whether the seller should make repairs to the home. The seller may have enough time and money to make repairs to increase the value of their home. Sometimes, they won’t. Understanding this timing is crucial so you don’t accidentally advise your seller to waste time making repairs that will make the timing of the sale too stressful as critical foreclosure dates approach.
- Locate and negotiate all junior liens on title. You need someone to review and understand all of the liens on the title report. Often, homeowners who are in default have additional judgment liens on Title. While the sale of the home is underway, you should have a knowledgeable party working on any negotiable liens so you can maximize your seller’s equity. Not all liens on title need to be paid in full, especially old credit card debt. Liens also get sold between creditors as time passes. Sometimes, you simply need someone to find which creditor is handling the lien.
- Order, audit and maintain payoff statements. You need to know how much money your seller owes on the mortgage AND on any additional liens on title so you can estimate how much money they will receive from the proceeds of the sale.
- Escrow agents who aren’t well versed in the needs of a distressed property sale are often slow to request payoff statements. These statements are usually not provided by the lender themselves so someone needs to get it from the correct party (typically a Trustee or foreclosure attorney).
- Fees can get attached that need to be audited and the number needed to pay off the mortgage can change every 15 days. So, you need someone responsible for keeping the numbers up to date to prevent delays in closing.
If you are listing a home where the seller is in a stressed financial situation, facing foreclosure or has defaulted on their mortgage, give me a call so we can chat about what’s going on: (425) 654-1674.
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