Distressed Home Sale Management

• Behind on payments and afraid that any day the bank will foreclose on you
• On the verge of missing payments and unsure of how to move forward
• Overwhelmed with mail and phone calls from your bank offering you confusing and conflicting options
• Bombarded with offers from “investors” or people who want to “buy your home for cash” but it may be hard to decipher who is legitimate and who is trying to take advantage of you
• Wanting to sell the home but not knowing where to start

Selling a distressed home can be a disaster if it’s not handled correctly. You may have an agent who doesn’t understand foreclosure timelines and can’t help you know when the right time to sell is. You may not know if your foreclosure has already been made public.

It may be hard to know whether pouring money into home repairs is the right thing to do. There may be other debt attached to the home that needs to be handled but it may be hard to know who owns the debt and who you need to contact.

Lenders make it difficult to get a straight answer as to how much you owe to pay off the mortgage. This  makes it hard to understand how much money you will receive from the sale.

There is a long list of parties and issues that are involved in a distressed home sale.

Over the years I’ve found that it is best to have one person, ideally an attorney, to coordinate and manage the sale. The attorney keeps everyone on the same page and is responsible for navigating the process and ensuring that things go smoothly and that you avoid foreclosure.

1. Advise on the timing of the sale and track the foreclosure timeline: You need someone familiar with foreclosure procedures to monitor how long you have to sell the home before it goes to auction. You also need someone to help you manage the timing of your sale against the timing of the foreclosure.You’ll need to know 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.
2. Monitor when your home is set to receive a public notice of foreclosure: If possible, you want to sell your home before information about your foreclosure goes public. This will help your negotiation position with potential buyers. If buyers know you are facing foreclosure, they may offer less for the home as they will know you have to sell. You will be in a better negotiation position if your sale closes prior to the public notification of the sale.
3. Advise on whether you should make repairs to the home: You may have enough time and money to make repairs to increase the value of your home. Sometimes, you won’t. Understanding this timing is crucial so you don’t waste time making repairs that will make the timing of the sale too stressful as critical foreclosure dates approach.
4. Locate and negotiate all junior liens on title: You need someone to review and understand all of the liens on the title report. While the sale of the home is underway, you should have a knowledgeable party working on any negotiable liens so you can maximize your 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.
5. Track your eligibility for mediation: Someone needs to be tracking your foreclosure timeline so that you know whether you’re eligible for mediation under the Washington state Foreclosure Fairness Act. Mediation can stop the foreclosure and buy you more time to complete the sale. If you miss your eligibility deadline, you can miss the opportunity to stop the foreclosure and you won’t be able to sell the home on your terms.
6. Order, audit and maintain payoff statements: You need to know how much money you owe on the mortgage AND on any additional liens on title so you can estimate how much money you will receive from the proceeds of the sale.
7. 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).
8. 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.

Real estate agents will tell you that it’s easy to complete a “quick sale” when you’re in a distressed situation but I can’t tell you how many times clients come to me in a frenzy a few days before a foreclosure auction date because something has fallen through the cracks.

If you’re considering a distressed sale or need help with an existing sale, call me today at: 425-654-1674.