If you’re trying to sell a distressed house in Orlando, Florida, you might be wondering if you’re attempting to do something impossible. The lender is breathing down your neck, the house may be in disrepair, and you aren’t able to find any suitable buyers willing to close on a deal quickly enough. It’s enough to make you want to give up because there are no solutions. You might be surprised to find that isn’t the case.
However, when it comes to distressed properties, you need to be smart in how you go about it, whether you plan to sell the house on the open market or as-is to a cash home buyer. How you make each decision will have an impact on the money you’re able to make on the sale and how quickly the whole process can be completed. Let’s look at how to sell distressed properties in Orlando, FL.
A Full Guide To Sell A Distressed House In Orlando, Florida
What Is a Distressed House?
It might be a little unclear exactly what it means to have a distressed house or property, so let’s clarify what we mean. Distressed property means any kind of property that is in serious danger of foreclosure or is already being sold by a lender. A house becomes distressed when the owner is unable to keep up with mortgage payments or the tax bill connected to the property. That said, not all distressed houses have been repossessed because of late or non-payments. It can also be repossessed because the lender wants to protect their investment in the property. If there are other financial claims on the property or if mortgage fraud is discovered, they may take ownership of the house.
What is Foreclosure?
We sometimes take it for granted that many homeowners understand all of the real estate terms that come up around the sales process. However, it’s important that we define everything completely. Foreclosure is the legal term for when your lender takes over control of your property so that they can sell it to recoup the money that the owner was unable or unwilling to pay to satisfy the mortgage. So if you miss enough mortgage payments, or just stop making them altogether, your lender will put your house in foreclosure.
In Florida, the lender can begin foreclosure proceedings after a loan is unsatisfied for 120 days. You may receive a formal notice of foreclosure and court filings will be made. The mortgage lender will also file a civil action complaint against you, which officially begins the foreclosure timeline. It’s generally understood that once this happens, most owners who will have a foreclosure timeline of around six months, notwithstanding any extensions or legal wranglings they’re able to do.
What Is a Distressed Sale?
Because of the financial situation wrapped up in the house, it needs to be sold quickly to resolve the issues and the outstanding debt. This is a distressed sale. It usually means that the seller is willing to accept a lower price from buyers in order to satisfy the outstanding debt and move the property off of their books. The proceeds of a distressed sale can sometimes be used for other reasons, such as outstanding debts or medical expenses.
How a house becomes distressed depends on the specific situation. Foreclosure is a common reason but there are others. If the house is owned by individuals who are getting a divorce, neither may want to continue owning the house and a quick sale is in order. Relocation can also cause a distressed sale as time is of the essence and the entire timeline may be very short.
Distressed Homeowners Can Consider a Short Sale
Lenders are looking for ways to avoid the foreclosure route. It brings with it plenty of legal and financial headaches, not to mention the bad PR that can often come with a series of foreclosures in a specific town or neighborhood. So while a short sale probably won’t net them the most money they could get for your distressed house in Orlando, they might agree to it because it’s the path of least resistance for all parties.
A short sale occurs when you offer a house for sale at a price below the amount currently owed by the owner. It often happens when the homeowner when the value of their property drops by 20 percent or more. Once the lender signs off (which usually requires documentation and reasoning), the homeowner must negotiate a payoff number with the lender and then seek approval on the home purchase from the lender. Ultimately, the lender is the one who makes all the decisions here.
The seller may still have to satisfy a percentage of the overall amount on the loan, but it won’t be near as large as it would have been. Also, a short sale allows you to avoid a negative hit to your credit score that comes with foreclosure. That’s a big bonus if you’re hoping to buy another house soon.
Work With Your Lender If Possible
It should be noted that even if a house is in foreclosure, it’s possible to still find a way to work with your lender and avoid losing your house. Lenders don’t like to go into foreclosure and would prefer to find a solution that doesn’t tie up their money and assets. Don’t be afraid to call your lender and ask them how you might be able to restructure your loan in order to make it more feasible for you to catch up and get back in good standing.
You might also ask your lender for forbearance. This would mean they will reduce or suspend your payments for a temporary period because you need to sort out a short-term change to your finances. If you’re starting a new job or are going through a major lifestyle shift, the lender or bank may be more equitable to do this. Again, they would prefer to avoid foreclosure as well.
A distressed house owner should also do an inventory of everything else you own and find out what its value is. If not losing the house is your goal, the homeowner can sell high-priced items quickly in order to make good on payments. If you also own a boat, car, expensive jewelry, or other pricy items, you might be able to turn them into mortgage payments. This isn’t a long-term solution but it can at least buy you some time.
Time is of the Essence for Distressed House Sales
In a perfect world, you would list your distressed house on the open market and it would sell in days. This, of course, is extremely unlikely for a number of reasons. This assumes your house is in ideal condition and doesn’t come with any repair or damage concerns. It also assumes your house is cleaned, decluttered, staged, and presented perfectly. And it presumes a lot about the state of the Orlando housing market and the fickle nature of buyers.
The truth is that a traditional market sale using the MLS system will take months and possibly years to complete. A distressed house seller in Orlando doesn’t have that kind o time. They need to sell their house as soon as possible to avoid defaulting on their mortgage or losing their house altogether.
Once an owner has defaulted on their mortgage, their lender is already putting a process in motion that will end with foreclosure on the property and the seizing of their house. If an owner waits too long to complete their distressed sale, they risk missing out on the chance to satisfy the lender and get out from under the financial situation. It also means they miss out on being able to explore their options, like a loan modification or selling as-is to a cash home buyer. Plus there are situations like unpaid taxes that can complicate the process if you don’t move quickly.
You also don’t want to find yourself in a situation where you’ve vacated the house while waiting to sell it and squatters or problem tenants move into the property. That creates a whole new slew of problems to deal with and also puts the owner at risk of legal ramifications. A city or county can also fine a homeowner if a house falls into disrepair or contains bad conditions that can create problems.
Understand Your Distressed House’s Value
A big mistake that owners of distressed homes in Orlando, FL make is misunderstanding the value of their property. That can lead to a lot of problems when it comes to selling your house in a timely manner as well as how much money you can get for the property. Even though the property is distressed, you need to be able to provide a viable value that helps you set a reasonable price for buyers to consider.
The price you list at could determine whether or not you sell quickly. Price the distressed house too high and you’ll scare off potential buyers. Price your distressed house too low and it will cause buyers to wonder what’s wrong with it, not to mention it means you’ll get less money than you could have. That’s a big negative considering that you’re trying to satisfy financial obligations with the sale.
There are a few ways to determine the price you should be aiming for. The easiest way is to go online and look at real estate valuation websites. They’ll have recent home sales data and you can compare recently sold homes, what their listing price was, and how the market actually ended up seeing them. You can also get a sense of your own property value as well as the value of homes nearby that sold recently. Just be sure to account for the differences between your house and theirs.
You can also get a competitive analysis from a local real estate agent. They will usually offer this service for free, though it’s done in service of hoping you’ll hire them as your agent. If you plan on hiring a real estate agent, make sure they do this so you can get a sense of how well they know the market. But don’t feel as though you are required to work with them just because they provided a report.
You can also hire an appraiser to come by and give you an estimate of your property value. Of course, you’re going to have to pay for an appraisal report, usually around $300 and $500, depending on the person or company. But it’s worth it in order to have a legitimate idea of how valuable your property is so you can price it properly. It’s worth noting that the buyer’s lender will still want to do their own appraisal as part of the loan application process, so you will have to have a second one done later regardless of what yours says.
Avoid Unqualified Buyers for Distressed Houses
Chances are that you’ll end up working with a real estate investor or cash home buyer in order to sell your distressed house in Orlando quickly. However, not all distressed property buyers are created equal and you’ll want to make sure you’re dealing with someone who can and will actually purchase your property.
If you are approached by a prospective cash buyer, ask them to provide proof of funds. That’s something Florida Cash Home Buyers always does. If they can’t provide you a proof of funds, that’s a sign they aren’t going to be able to follow through on what they promise.
If your distressed property is in need of repairs or has extensive damage, be sure that prospective cash buyers come to take a look. Some buyers will end up canceling the deal once they see the extent of the issues, which leaves you in the lurch and wastes your time and money. A reputable cash buyer like Florida Cash Home Buyers will buy your distressed house in any condition, no matter what kind of repairs are needed or damage has been caused.
You’ll also want to do a thorough background check on any cash home buyer. Look at their testimonials. Read the reviews. Look at their rating with the Better Business Bureau. Visit the office. Do what you need to do to feel good about working with this company. If you don’t like what you see or if you’re not getting the answers you want, consider why that might be.
Sell Your Distressed House in Orlando As-Is
If you’re in a situation where you’re going into foreclosure, you don’t have a lot of time. A distressed house is going to be an albatross that hangs around your neck until it’s sold, even longer if you aren’t able to sell quickly. If you don’t want to deal with your lender or hire a real estate agent, you can sell your house as-is to a real estate investor or cash home buyer like Florida Cash Home Buyers.
They will not only work with you on a solution to buy your house in foreclosure, or any other financial situation (tax lien, expensive damage), but they will pay you in cash for your house quickly. That’s cash you can then turnaround and pay to the lender to satisfy your mortgage and then move on with your life.
The easy process begins when you contact them and let them know that your house is distressed and you want to sell it quickly. They will ask for all of the pertinent information and they may come to visit the property and assess it, taking into consideration the financial situation as well as any other issues. They will then present you with a fair cash offer for you to consider on your own terms. There is no obligation to accept the other. If you do want to move forward, you decide when you want to close and sell the house on your own terms. Then, you get to square your financial situation and step away from all of the madness and problems that come with owning a distressed property in Orlando, Florida.