If you are having difficulty affording your home during hard economic times, you may be able to avoid foreclosure through either a short sale or a deed in lieu of foreclosure. While neither option is as desirable as staying in your home, they do at least help you avoid the costs and hassles associated with foreclosure. Let's go over some frequently asked questions first:
HOW QUICKLY DO HOMES SELL ON THE RETAIL MARKET?
Since 2013, Portland has been a very strong seller’s market (time of this posting is Jan 2021). We are selling homes, often times with multiple offers, over list price, within days. Do not sell your home to an off-market cash investor without talking to a wholesale and flip home knowledgeable Real Estate Broker.
DO I NEED TO CLEAN OUT ALL PERSONAL PROPERTY BEFORE SELLING?
No. You do not need to clear out personal property, debris, garbage or any other items from a property. We can sell your property for top dollar, as-is.
DO I NEED TO MAKE REPAIRS TO GET TOP DOLLAR?
NO! There’s a major misconception, one that is pushed heavily by investors, that you need to have a “move in ready” home or a “financable” home in order to demand top dollar. That is not true AT ALL. A reputable Realtor knows how to address these issues to drive top dollar, while ensuring you don’t spend out of pocket money repairing the home before closing.
CAN YOU OFFER ME A CASH "AS-IS" OFFER?
Yes! We can get multiple cash, “as-is” offers for you within 48 hours. However, this is rarely in your best interests. These types of offers typically only make sense when a seller has a VERY short timeline to sell. If your home is going to be foreclosed on, within a week, you may want to consider a cash, off market offer. Otherwise, work with a knowledgeable professional that has a fiduciary obligation to look after your best interests. You’ll net more.
CAN I LIST MY HOME ON THE MARKET "AS-IS"?
Yes! This is the absolute best option you have to net the most amount of money. A savvy Real Estate Broker can guide you through any debris removal, repairs and/or renovations to ensure you are netting the most possible, while limiting stress and exposure.
I HAVE A CASH "AS-IS" OFFER. SHOULD I TAKE IT?
DO NOT accept an offer on your home until you have someone representing you. Investors represent themselves. They do not have your best interests in mind. We have never seen an off market offer net a seller more than a correctly listed retail offer and we have seen hundreds of them. Get somebody in your corner.
What is a short sale? A short sale is the sale of your home for an amount less than the amount you still owe on your mortgage. The sale does not have to be to your lender, but your lender has to agree to it. Borrowers choose this option when they cannot afford to continue making monthly mortgage payments and cannot pay the difference between the sale price and the unpaid mortgage amount. However, the borrower is not freed from his obligation to repay the remaining mortgage balance unless the lender agrees. Many lenders require that disadvantaged borrowers provide proof of economic or financial hardship before agreeing to a short sale.
Advantages of a short sale:
Disadvantages of a short sale:
What is a deed in lieu of foreclosure? A deed in lieu of foreclosure transfers ownership of your home to your lender to pay off your loan and avoid the foreclosure process. Prior to an ownership transfer, the lender and borrower must enter into a settlement agreement that includes a sale price for the home that is at least equal to its fair market value. The borrower must also enter into the settlement agreement voluntarily and may be required to provide written proof that he is doing so.
Advantages of a deed in lieu of foreclosure:
However, issues arise when there is more than one lien holder on the property. If you have outstanding judgments or other unpaid mortgages, your lender would be assuming responsibility for payment of these outstanding obligations if it purchases your home by deed in lieu of foreclosure. Under these circumstances, your lender may wish to foreclose on your home in order to wipe these liens out.
New option: Deed for lease or mortgage to lease, is another alternative to foreclosure, but relatively new, is “deed for lease” or “mortgage to lease” program. This rent-back program was introduced in 2009 by Fannie Mae and banks are trying to implement their own programs.
This rent-back idea is tied to the deed in lieu of foreclosure program in which the lender would have to agree to allow the defaulting borrower to stay in the home as a renter for one to three years. Not everyone qualifies for this program, since it would be at the discretion of the lender.
Bottom line, If you are having trouble making your mortgage payments, you should discuss these options with your lender as soon as possible. It could save you the time, trouble and hardship of going through the full foreclosure process.