Can’t sell my house, what are my options?


Whether you can’t sell your house for what you owe, because of a divorce, a slow real estate market or for some other reason, it can be depressing and leaving you wondering what to do.  It’s important to remember you have options, even when it appears you cannot sell a house.  If you’re wondering how to get rid of house that won’t sell, then keep on reading.

Can’t sell house, what to do?

There are many reasons why houses don’t sell beyond our ability to correct – location, season of the year, etc.  Do you owe more than the house is worth?  Are there too many expensive repairs or is the house is dated?   It’s important to identify the reasons you cannot sell, before choosing a solution.

Can’t sell house for what I owe

If you owe more than what you can sell your house for, you probably need to do a short sale.  Short sales were very popular during the Great Recession. Often people assume that short sales are for people who need to prevent foreclosure due to loss of job or economic hardship.  However, short sales existed long before the Recession and are often used for people who need to sell for reasons other than financial. These reasons might be divorce, job transfers, or family illness just to name a few.

However, many people mistakenly believe that homes have appreciated and short sales are no longer needed.  Nothing could be further from the truth.

In a study released by Zillow in May of 2018, 4.5 million home owners in the United States still owe more than their house is worth.  In the affluent city of Roseville, CA roughly 8% of all homeowners were still underwater as of 2018 according to Atom data.

How a short sale works

With a short sale, the lender(s) agree to accept less money than you owe when selling your home.  Short sellers must use a licensed real estate agent to sell their home.  The real estate agent will then negotiate with the lender to accept less than is owed.  It is super important that you use an agent who is personally experienced with short sales.  You need an agent who knows how to stop potential foreclosure and negotiate on your behalf.

For a thorough explanation of the process and choosing the right short sale agent, read our How to Short Sale your Home.

Can’t sell house during divorce

Once a divorce petition is filed, state laws normally prevent the sale of your home without a written agreement, called a stipulation.  However, the court may order the sale of your home if one of the attorneys files a request with the court.

One spouse may wish to keep the house.  The other spouse wants to be rid of the financial stress of the home. One spouse may need the money for expenses.  The other may hold the house ransom. Unless you want the court to decide, the divorcing couple needs to work together to decide what they want to do with the house.

“You don’t have to wait until the end of the divorce to have the house sold. But if you want it sold before the trial, there needs to be a very good reason.”

According to Farzad Family Law, LLC, there are two common reasons to sell before the trial ends.  The first is if the home is at risk of foreclosure.  This might be due to the mortgage or the property taxes not being paid.  If this is the case, then the court may order the home to be sold prior to the final divorce decree.  The second reason would be if the divorce becomes drawn out and one or the sale of the home might pay for the legal expenses.

If your home is underwater or the real estate market is slow, it can make the process even more difficult and you may have to get creative.

Options during divorce

Sell house using a short sale

If your home isn’t selling because you owe more than it’s worth, you may need to consider a short sale as described above. A short sale typically requires a personal or financial hardship for a lender to accept.  However, divorce definitely counts as a hardship.  A one page letter to your lender stating that you are in the middle of a divorce and need to sell your home may be all that is necessary for your lender to agree to a short sale.

Sell house to other spouse

If one of the spouses wants to keep the house, they may be willing to buy out the other spouse.  If this is the case, it’s important to contact that lender to ask that they remove the spouse who will no longer  be living in the house from the loan.

Sell house to end user

If your home is in good condition and both spouses are not in a hurry to sell, you can sell your home using a Realtor.  While the process takes longer, it will require the spouses to continue to communicate with each other.  Spouses will have to agree on the listing agent, the sales price and co sign numerous documents.  This may get you the highest price, but may also take longer and create more stress in an already difficult situation.

Sell house to investor

If you’re looking to remove some of the stress of selling your home, selling to a real estate investor may provide you with a quick way of exiting an expensive mortgage and getting cash quickly.

Can’t sell my house, who will buy it?

Maybe you’ve tried selling your house through a Realtor® before without any luck.  Selling a home in the past has typically been done through a real estate agent.  However, in today’s Internet age, many sellers and buyers are bypassing the middle man completely and buying or selling directly with each other.

Any house will sell – for the right price

If you have been unsuccessful in the past in selling your home, it might be the price was too high.  Any home will sell for the right price. It doesn’t matter how much you spent on the house or how much you feel that it’s worth.  All that matters is what someone else is willing to pay for it.

It doesn’t matter how much you feel that it’s worth. All that matters is what someone else is willing to pay for it.

When selling a home, one has to separate their emotions from the sale.  Your emotions might be a personal attachment to a family home you spent a lot of energy fixing.  It might also be the potential of losing money if sold for anything less?  If you’re stuck on a particular price, how much is it going to cost you in the long run?  How much are you losing by paying extra mortgage, insurance and property taxes for a house you no longer want?

FSBO and Craigslist

Some people try the route of For Sale by Owner (FSBO) or Craigslist, while others sell to family or friends. While FSBO’s are definitely the slowest approach to selling, if you’re patient you might find the perfect buyer.   Remember, you must disclose to potential buyers any known defects with the property, even if selling as-is.

Offer seller financing

If your home is difficult to sell due to location or market conditions, you might consider seller financing if you have equity in the home.  With seller financing the seller agrees to sell the property to the buyer, and the buyer makes payments to the seller.  Often, these take the  form of a promissory note where the buyer makes loan payments to the seller for five years.  At the end of five years, the buyer must refinance and pay off the seller.

Lease option

You might also consider selling your home with a lease option.  There are always young families who cannot afford a down payment for a home, who would love a lease with the option to buy.  In this scenario, a portion of each months rent, becomes the buyer’s down payment.  At the end of the option period, often five years, the buyer has the option to buy the property.  A typical lease option collects a higher rent amount which may help if the seller has an underlying mortgage they are paying.

When Not to consider a lease option

Mortgage, property taxes and insurance are more than 60% of what you can charge for rent

If your mortgage, property taxes and insurance are more than 60% of what you can charge for rent, then you shouldn’t consider a lease option.  For example if you your mortgage, property taxes and insurance are $600 a month, you need to be able to collect $1,000 a month in rents.  As a landlord, there will always be vacancies and expenses that you will incur.  Roofs need repair, houses need paint, windows get broken.  Even if your tenant agrees to fix things themselves, there can be expenses that cost more than your tenant can afford.  When this happens, the costs of repair will fall on you.

You live more than an hour away

Don’t lease your house out if you live more than an hour away.  Cities like Sacramento require that landlords live within a certain distance of their rental properties.  If they live farther away, they require local property managers.  Property managers will suck roughly 10-15% of your rental income right off the top.  Even if there aren’t local ordinances requiring you to live nearby, the hassle of managing a property an hour away is a challenge.

You’re a sucker for a sob story

If you’re a sucker for a sob story, skip trying a lease option to sell your house.  Everyone has difficulties in life and sometimes bills, including rent are hard to pay.  To be a landlord, you have to have a little bit of toughness and firmness.  If you easily fall for sob stories, it will only be a matter of time before a tenant eats you alive.

You hate the idea of being a landlord

Lastly, don’t consider a lease option if you hate the idea of being a landlord.  Is your idea of being a landlord tenants calling you at ten o’clock at night because of a clogged toilet?  Then a lease option is probably not for you. It’s not really about toilets, but if that’s what your mental picture is, you’re better off looking at other options.

If your still thinking about about a lease option, check out our free Ultimate Guide to Renting your House Privately.

Due to the many rules about lending and options, it would be wise to seek legal counsel if you decide to do either a lease option or seller financing.

How to get rid of house that won’t sell

Sell to a company that buys houses

Many sellers reach out to companies that buy houses to fix up an sell them.  These companies buy houses as-is.  This means you don’t have to fix anything, clean anything or move anything to storage before selling your home.  They may not always pay top dollar for your home.  However, they offer the convenience and speed that is similar to trading your old car in for a new one.  You know you may not get what you could if you sold it through a Realtor.  But, you can sell your home quickly, without the hassle of buyers coming through your house.

If you have a home in the greater Sacramento area that needs lots of repairs, is dated or you just need to sell quickly, The Real Estate Solutions Guy can give you a written cash offer in 24 hours.  There’s no gimmicks or pressure.  We’ll give you a fair offer for your house while still making a small profit to keep the business running.

Get an Offer for Your Sacramento Area Home

 

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