Many homeowners fall in despair if they have suffered an accident at home that may have destroyed their real estate and impacted its value. On one hand, you are dealing with the inconvenience of living in a damaged house. On the other hand, you have to deal with selling it at a price that is lower than the market value.
This leaves you confused on whether or not to sell what is left of your property or wait for another year so that prices will go up again.
If you are contemplating selling your property at less than the market value, then this article is for you. This article will address what to do with properties that are worth less than they’re sold for, and how to make the sale happen without losing money.
What is a distressed property?
A distressed property is any home where the owner owes more on their mortgage than it's worth in today's market. The house could be valuable but if liens or other factors are holding it back from being profitable, then it falls into this category.
Fortunately, there are real estate buyers that focus specifically on buying damaged properties like webuyfiredamagedhouses.com that come as a light at the end of a dark tunnel. These companies act as a middle man, buying and restoring houses before flipping them again. This allows you to receive a fair price and also lets you know that the house will be saved, if not improved.
How to know if a property is distressed?
There are several ways to determine whether your house is distressed or not. One of the most common ways is by talking to a real estate agent and checking the estimated market value against the current loan balance. You should also check for tax liens and other judgments that might affect the home's value.
If you have a house that is worth much less than the price you paid for it, then this falls under distressed properties as well. You could check with a real estate agent and see if they can help you determine the home's value nowadays.
A realtor will have access to resources on recent transactions of similar homes in your neighbourhood so they can give you accurate numbers.
After determining if your house is distressed or not, the next thing to do is start looking for real estate companies that buy houses in any condition. You should contact several of these companies and ask them how much they are willing to offer for your property. You must get more than one offer so you know what price range you're looking at.
What other properties are considered distressed?
The following homes are also considered to be distressed:
- Properties that are abandoned
- Properties that are condemned or considered unfit to live in
- Properties with homeowners whose mortgages have not been paid for over 2 months
Once you've received the offers, check them against your estimations and see which one is closest. If there isn't a company willing to pay what you expect, then it might be time to make adjustments. You don't want to sell your house at less than market value but if this is the only way for you to move on with your life, then it's worth considering.
However, keep in mind that some sellers prefer to rent out their property instead of selling it at a loss just so they can generate income while waiting for the prices to go up again.
What are the benefits of selling a house at less than market value?
You might not even consider this option if you don't have much money to invest. However, if offers are draining your savings and your home is in a state where nobody wants to buy it because of its condition, then this is your best option. It's better to get rid of it now considering that it will take some time before property values go up again.
Another good reason for selling distressed properties at low prices is that the risk factor involved with buying them is almost zero. This means that they can be bought without taking into account whether or not there would be legal obstacles such as liens or unpaid debts. You'll also save money because you won't have to pay for legal fees or repairs.
However, if you plan on living in the house before selling it then you might want to consider the costs involved with those actions as well as the price of your upgrades.
Selling your property at less than market value might seem like the last resort to you but in reality, it can be a great opportunity. If you're struggling to make payments and don't have much money left, then this is your best option for getting rid of an unwanted house that nobody wants.
You'll save time and money by avoiding legal fees or repairing damages on the property before putting it up for sale again. Keep in mind that if you plan on living there first then you will need to factor those costs into how much profit you get from selling at a low price just so they are clear upfront.