Get An Offer Today, Sell In Less Than 21 days...
Selling a Home During Hard Financial Times
Selling a home is an uphill task. So much so that 40% of Americans admit to experiencing some stress during the process. It get’s tougher when you need to sell your house fast in PA or have some underlying or ongoing pressures.
Still, it has to be done.
How do you go about it?
Let’s explore some situations that would push you to sell a house quickly, how to go about the sale, and some pitfalls to avoid.
Selling a Home in Hard Financial Times
The ideal situation would be to sell your house when the market is favorable to sellers. This is when the economy is on the up and up, meaning people have money for big purchases.
A seller’s market also has more people looking for houses than people selling. This means that your house gets a good number of potential buyers soon as you put it on the market. This is a game of numbers. The more interested buyers you have, the chances of closing quickly increase. Your bargaining power is also better with many buyers than with a couple of takers.
However, this is not always the case, and you don’t always land on a seller’s market. When you throw in hard economic times or concerns about an impending recession, things get a bit murky. For example, a recent survey showed that 60% of Americans are concerned about a looming recession. Whether or not this comes to pass, it will affect you if you want to make a quick sale.
A struggling economy or recession means, among other things, work layoffs. Which ultimately means people don’t have the spending power to purchase homes or service mortgages. Lending requirements also become much tighter during recessionary periods because lenders are understandably risk-averse.
Also, people that now can’t service their mortgages are looking to sell before being foreclosed on. The result: more houses for sale than willing and able buyers. This is known as a buyer’s market, and it disadvantages you as a seller.
For one, your house takes longer to sell than the average. Secondly, the market will favor buyers, meaning you will likely sell at a lower price and less favorable terms.
Selling a House During High Mortgage Rates
2022 has seen a surge in mortgage rates. The fixed-rate mortgage, which is the most popular in the U.S, averaged 7.08% on 10th November 2022. The rate was 6.95% the week before. While this seems like a small spike, get this: the rate for a 30-year mortgage just a year before was 2.98%. Yes, ouch!
We have seen a steady rise in mortgage rates in 2022 thanks to the Federal Reserve’s decision to hike interest rates to tame soaring inflation. And the housing market is feeling the pinch.
To make sense of this, let’s look at this example.
Someone that put a down payment of 20% on the house in 2021 is paying around $1,187. With mortgage rates above 7% around this time of year, a home buyer on a similar down payment would pay $874 more every month, coming to $2,065.
This affects you directly if you want to sell your home before the New Year.
Generally, purchasing power has plummeted, pushing many out of the market. The remaining few have to look at houses with lower price points or make significant compromises on size, location, features, and condition in order to find something within their price range.
All is not lost, though, as, besides the high mortgage rates, there are very few houses in the market. This offers some reprieve to sellers.
However, other factors outside the economy might warrant one to make a quick sale on the house. Let’s look at other reasons people might need to sell their homes quickly.
You are Facing Foreclosure
A foreclosure is a process instituted by your mortgage lender once you fail to make mortgage payments as prescribed in your mortgage contract. Federal laws stipulate that your lender can send you a foreclosure notice once you miss the fourth payment.
The journey to foreclosure takes six months to a year, depending on whether the foreclosure is judicial or non-judicial.
The time between when the notice is issued, and the financier taking possession of your home is called the pre-foreclosure period, and you can sell your home and settle your debt during this time.
Granted, you only have a little time to do this, meaning you need to sell your house fast in PA. Again, this is easier said and done.
Here are some things you need to do if you want to sell a house in pre-foreclosure.
Estimate the value of your home
To start you off, you can use the numerous home pricing tools available online to find a ballpark value of your home.
You will need to input some details about your house to get the estimated value. The details you key in must be accurate because the tool will use the provided information, alongside housing data, to provide you with an estimate.
A common mistake people make is trying to salvage a non-existent equity. For example, if you bought your home for thousands of dollars more than the going rate, this will have no bearing on its current value.
Because time is limited, you need to come up with a value that best sorts out the impending foreclosure. It would help if you considered pricing slightly below market rates to entice more buyers.
Total What You Owe
Your mortgage is in default by the time you get a foreclosure notice. You need to total;
- Missed payments
- Chargeable penalties following the default
- Outstanding principal amounts, as well as
- Any attorney’s fees for the delinquency
The most recent communication you receive from your lender should have the most updated figures to help with this.
You will get a clear picture of where things stand when you deduct what you owe from the estimated sale price.
Subtract selling costs
Besides the above costs, you also need to tally selling costs. These will include realtor fees, closing costs, moving costs, staging expenses, and so on.
Again, subtract these from your estimated selling fees as well. The purpose is to determine how much of the outstanding mortgage, fees, and expenses will be covered by the home sale.
If you are lucky, you will be in the clear, with some cash left over. If not, you will still need to figure out how to get extra money to clear the outstanding debt.
A regular foreclosure comes about after the inability or failure of a mortgage holder to pay their mortgage.
A tax foreclosure, or a tax lien foreclosure, occurs when a property owner fails to pay required taxes, resulting in a tax lien. These taxes can be:
- Property taxes
- Federal income taxes
- State income taxes
Can I sell my home in Philadelphia despite having a tax lien? Indeed you can. One of the things you can do when faced with a tax lien is to sell the property and pay the debts. This is often a much better outcome than letting the authorities take over the asset.
Let’s look at this practically.
Say your home is valued at $200,000, with $100,000 outstanding on the mortgage. You then have a tax lien of $30,000. If you sold the home at $200,000, you could pay off your mortgage ($100,000) and settle the $30,000 tax lien.
You then have $70,000, though part of this amount will be eaten up by agency costs and losing costs. But you would be debt free, with a little cash in your pocket.
However, life doesn’t always give us ideal situations. As such, you will encounter another challenge if the house sale doesn’t yield enough to settle the lien and the outstanding mortgage amount. You would need to find other avenues to settle the outstanding amounts without enough home equity to settle both.
Looking to Move Quickly
Aside from accruing debts, there are other reasons why you might need to dispose of your house quickly.
One of these is the need to move.
People relocate for many reasons, including work, job loss, to be closer to loved ones, divorce, and so on.
Most of these circumstances will necessitate someone to move quickly, and it might not make much sense to keep owning your current residential property.
You might inherit property after losing a loved one but don’t wish to live in it or rent it. Selling it becomes a worthwhile consideration.
Once you have all paperwork in order and are through with the legal processes, you might want to sell the house rather quickly.
Inherited houses will sometimes be a bit neglected, thanks to the time it takes for the house to become yours legally, logistics, and so on. As a result, you might have a house, but it’s a fixer-upper.
From the above, there are various reasons why you might need to sell your house quickly. But you are probably still asking; How do I sell my house fast in PA?
Tips To Help You Sell Your House Fast in PA
Sell My House Fast: Consider the How
This is something you need to figure out in the initial stages of selling a house. There are two ways to get paid for your house;
- Using a financing contingency
- Selling a house as is in PA for cash
When selling your house on a financing contingency, the prospective buyer will be looking to purchase the home using financing from a lender (Mortgage). On the other hand, cash buyers are individuals or home-buying companies with the cash to buy the house outright.
There are pros and cons to either arrangement.
With a financing contingency, there is a lower risk of being defrauded. It has downsides, however, including delayed or canceled sales and numerous processes like appraisal and inspections. These can be frustrating for someone looking to make a quick sale for whatever reasons.
On the other hand, cash sales have lower fall-through rates which come with less anxiety. This notwithstanding, it’s important to keep in mind that cash offers are also often significantly lower than the asking price.
Another downside is that sellers can be scammed if they fail to carry out due diligence. One way out of this is to identify a reputable home-buying company in Philadelphia. More on this later on.
Because they close faster, cash buyers might save the day if you want to sell urgently, like with foreclosures, tax liens, or relocation.
Pricing a house is a dicey issue. Pricing a house in a slow market is even more so.
You risk missing out on prospective buyers with limited funds if you go too high. If you go too low, people wonder what’s wrong with the house. If you start high and have to adjust to a lower amount later on, this disadvantages you and complicates the sale.
Similarly, the house you are selling is not merely a structure to you; it has sentimental value.
However, the people looking to buy your house want to make a good financial investment. This leaves no room for sentimental value.
Therefore, the bottom line is that you have to find a price that’s not too low to disadvantage you but not too high that you lock out buyers.
This is one advantage of working with a realtor. If you have one on board, they will use the particulars of the home, its location, and prevailing market dynamics to price it properly. This leaves out emotional pricing.
If it’s a Sale By Owner, research the going rate for houses similar to yours in your neighborhood. This should give you a ballpark for what to ask for.
Prepare For Staging and Open Houses
One of the processes involved in a house sale is walkthroughs. Here, prospective buyers in your price range will look through the house before proceeding with the purchase.
You need to put your best foot forward in any economy.
When selling your house, begin thinking through this process as early as possible. Staging has several fundamentals;
- Fresh paint
Cleaning a house means ensuring all spaces and nooks are hygienically sound. You never know what areas of your house buyers will want to look at. Here are areas to pay special attention to:
- The inside of cabinets, appliances, and other storage spaces
- Floor, room corners, and carpets
- Kitchen Countertops
- Inner and outer parts of windows and around window seals
- Bathroom counters, toilets, showers, and bathtubs
- The garage crawl space, basement, and attic
- Baseboards, walls, siding, and scuffed walls
A fresh coat of paint helps make everything look brighter and fresher. The rule of thumb is to stick with neutral colors work.
On the other hand, decluttering means identifying and removing damaged, unused and outdated items from the house. These take up storage space, attract dirt and look unsightly. You want buyers to see the house’s potential; clutter can cloud this.
The last task is depersonalizing. This means keeping away personal items you have on display. Think religious and political artifacts, family photos, and so on. Prospective buyers need to be able to picture the home as theirs. This is impossible to do if the house is full of items that are different from who they are.
Take Care of Quick Repairs
If you are not selling your home due to financial distress, carrying out repairs and upgrades can significantly shorten the sale process. This can be ideal if it’s an inheritance or you want to relocate. Not so much if you are being foreclosed on.
You will be surprised at how much minor damage to a home can discourage buyers and affect its value.
The reason for this is simple. Buyers that note small damages will often assume that the house has significant structural issues. For example, leaky faucets or carpet stains can cause a buyer to believe there is a leaky roof alongside mold and mildew.
It’s important to sort out small ticket repairs and make a few upgrades whenever possible.
You want buyers to see this as an aesthetically pleasing and structurally sound home that they can buy, move into and get on with life.
In this regard, fix leaky taps, clean carpet stains, fix loose tiles, give the house a paint job, and repair or replace broken, old or outdated doorknobs.
You can also update appliances and fixtures if you have some cash at your disposal. Remember, houses in great shape are likelier to attract many buyers and offers close to the asking price.
On the other hand, a run-down house can linger on the market, and when it does get buyers, the price is likely to be significantly lower than the asking price.
Hire a Reputable Agent
The internet has made it easy to look at a realtor’s reputation and house-selling records.
Because the house-selling process can be lengthy and tedious, people with little time find it useful to hire a realtor to oversee the process from start to finish. However, this convenience will cost you about 6% of your home’s worth in realtor commissions.
You can also look at agents with expertise in your specific circumstances. For example, if you are facing foreclosure, find a realtor that has dealt with this before. If you want to sell your house in its exact condition, look up a licensed realtor with a significant number of as-is sales under their belt.
Real Estate Agent, FSBO, or Cash Buyer?
There are three ways to approach a house sale during hard financial times. These are through a realtor, selling it yourself (FSBO), and selling it to a property-buying company.
The realtor way tends to be easier for most people because realtors sell homes for a living. As such, they will know about pricing, house staging, marketing, and so on. While you will pay a commission, the benefits can be well worth it, especially with restrained timelines.
An FSBO is difficult to pull off, especially for first-time house sellers. Remember that if you choose to go it alone, you are fully responsible and accountable for all the processes before, during, and after the sale. This means marketing the house, pricing it, getting it ready for staging, and open houses, plus all the associated paperwork.
Without the benefit of a trusted, resourceful realtor, you risk making some expensive mistakes along the way. Similarly, your house can stay on the market longer than you would hope without access to house listing platforms.
The next option that can be highly beneficial with distress sales is selling to a property-buying company.
House-buying companies have two standard features:
- They do not need third-party financing
- They buy your house off-market
When selling a home during hard financial times, these two things mean that there will be fewer contingencies. This also means you do not have to appease the financier.
Fewer contingencies are advantageous because the chances of something going awry and frustrating a sale are significantly reduced. You can also skip inspections, appraisals, home stagings, and all that. This saves you both money and time, which is crucial when selling property amid a financial upheaval.
There are several benefits to this, including:
- House-buying companies will give you a cash offer as soon as days after reaching out; consequently, you can close on your home in under a month.
- They buy houses on an ‘as-is’ basis, meaning you do not need to repair or upgrade the home. Not having to spend money is a plus if you are selling for financial reasons.
- You avoid the 6% commission you would otherwise pay to a realtor
- There are no closing fees and costs
Do You Want A Quick, Hassle-Free House Sale?
At Buying Property 215, we appreciate that some house sellers don’t have months to sell their house: they need to sell quickly. For this reason, we have a simple process that includes no realtors and no closing costs. We are also happy to buy fixer-uppers, homes with tax liens, and foreclosed homes.