Life happens, and sometimes there are unavoidable circumstances that could cause you to default on your mortgage. When this happens, you face either foreclosure or having to sell your home through a short sale. However, selling a distressed property is more challenging than selling a traditional home, given the unique circumstances and requirements surrounding short sales.
If you are in this situation, you may be overwhelmed and under intense pressure to go about the process and your options. This article will provide you with some insight on how to sell your distressed property in Massachusetts.
What is a Distressed Property?
A property is considered a distressed property when its current owner cannot keep its financial obligations of ownership. Typically, it happens when the current owner has defaulted on their mortgage.
If the bank has not yet repossessed the distressed property, it is sold by the current owner through a short sale. Under this type of sale, the property is sold for less than what the current owner owes its mortgage lender. Moreover, such a deal must occur before the property is foreclosed. However, properties that the lender has already repossessed are sold directly by the bank.
What is a Short Sale?
A short sale is a unique type of real estate transaction arrangement that involves the homeowner, the property’s mortgage lender, and a third-party buyer.
Since the current homeowner has defaulted on the property, the mortgage lender has to agree to the sale of property for less than the outstanding mortgage owed. This typically leaves the mortgage lender to collect on much less than what they were owed, so thus they are left “short.” In some circumstances, the lender will agree to wipe out the entire debt.
Do I Need Approval From the Mortgage Lender to Do a Short Sale?
Yes, you do.
There would be no short sale in Massachusetts without the explicit consent of the property’s mortgage lender. This is understandable since the property’s mortgage lender will be left “short” of what they were originally owed. Therefore, the offer and purchase and sale agreement must show that the buyer’s obligation to close on the property is contingent upon the current property’s mortgage lender’s approval of the short sale.
How Long Does It Take to Close On a Short Sale?
Closing on a short sale could take from 45 days to up to 6 months. Sometimes, the closing could take even longer from the approval of a short sale and the negotiation to reduce the mortgage balance. A bulk of this time is spent providing a long list of documents required by the current property’s mortgage lender from both the buyer and the seller. Although this task is typically time-consuming and frustrating, this is critical for both buyer and seller to adhere to the lender’s requirements to ensure that the short sale is approved.
Is Selling My Distressed Property To Cash Buyers a Good Idea?
Yes, it is a good idea.
Unfortunately, short sale properties have a limited pool of buyers than traditional homes due to many circumstantial factors. Some of these factors could include the short amount of time the seller has before the bank forecloses on their property, the property’s poor condition and distressed properties generally do not qualify for mortgages. Due to these limitations, having a cash buyer is an excellent opportunity to sell your distressed property. In addition to purchasing your property in cash, they can offer fast closings and would typically buy houses in any condition.
Pavel Buys Houses is a reputable cash home buyer that offers fast closings. Contact us for a no-obligation offer.
Should I Know the Value of My Distressed Property?
Yes, you do.
Similar to selling traditional properties, there is great value in knowing your property’s worth, even if it is distressed. Having the information on how much your property is worth can help you make an informed decision on how to price your property, even if it is distressed. A knowledgeable and experienced licensed real estate agent can help you understand the local housing market and provide insight into your area’s comparable properties.
Should I Verify My Buyers?
Yes, you should.
Since buyers of distressed properties tend to purchase them out of pocket, it is highly recommended to verify that the buyer would provide the payment for the agreed amount at the agreed date.
Time of the essence when it comes to a short sale and verifying your buyer’s financial status before seeking approval from the mortgage lender could save you precious time and effort in this already tedious process.
Do I Need To Disclose The Condition of My Distressed Property to the Buyers?
Yes, you do.
Like any other real estate sales transaction, a seller has a legal obligation to disclose their property’s condition to potential buyers. It is also advisable to disclose any issues with the property at the outset.
The issue with hiding property defects is the buyer may back out of the sale or lower their offer price if they discover the problem before the closing. However, a seller can face a future lawsuit if the distressed property has already closed, and your failure to disclose the conditions of the property has caused significant harm to someone or their property.
A sure way to avoid this type of headache is to be upfront about the property’s condition.
Ready to Sell Your House?
If you’re in need to sell your distressed property in Massachusetts quickly and want to save yourself the time, headache, and money, consider working with us. Selling a distressed property is a stressful process. In addition to the financial challenges you are experiencing, you are also under extreme pressure to quickly sell the distressed property. At Pavel Buys Houses, we are licensed real estate agents in Massachusetts that can help you sell your distressed property competitively in this current market. If you don’t want the time commitment and frustrations that come with selling a distressed property, we also buy homes fast in Massachusetts (and pay cash while offering fast closings!).
Get in touch with us today for a consultation or to receive this free, no-obligation cash offer at 781-309-7085.