Selling Distressed Property In Detroit
Many property owners face financial challenges due to job loss, medical expenses, and unforeseen situations. This often shifts their focus away from maintaining their property. Distressed properties don’t deteriorate overnight. However, selling such a property can be expedited depending on the selling method.
If you own a distressed property and intend to sell it, you have three primary choices— enlist a real estate agent, sell independently, or seek a cash offer. Among these, selling to a cash buyer is the most straightforward. Cash buyers typically don’t require repairs or fees, allowing for a convenient sale process. Additionally, their transaction speed is accelerated as they bypass the need for mortgage approvals.
Selling a distressed property doesn’t have to be difficult. With the right approach, you can attract potential buyers and resolve your financial challenges. Continue reading this blog to learn more!
What is a Distressed Property?
Many people think of distressed properties as fixer-uppers or condemned homes. But, in reality, they can also include properties nearing foreclosure or auction.
In simpler terms, when a homeowner can’t meet all their financial obligations tied to the property (like mortgage payments, taxes, etc.), their home is labeled distressed.
To explain more, here are the four primary kinds of distressed properties.
A House in Foreclosure
If a homeowner misses three months of mortgage payments in a row, their property could face foreclosure.
This means if the owner can’t catch up on the missed payments and fees, they’ll likely be forced to leave, and the lender will take over legal ownership of the property.
Usually, the lender sells the property at auction to recover their losses if the owner can’t sell it before the auction date.
AN REO Property
Real Estate Owned (REO) properties are foreclosed homes that weren’t sold during the initial auction.
These REO properties are labeled as distressed because they haven’t generated income yet. In simpler terms, their rightful owners (lenders, banks, or investors) are still responsible for maintaining or repairing them.
A House Approved for Short Sale
When a property goes underwater, its value on the market drops below what the owner owes in mortgage payments. This means even if the property sells, the owner still owes money on the mortgage.
Properties in distress, which are underwater and sold through short sales or foreclosure auctions, are a burden for both the lender and the homeowner because they sell at a low price.
A Fixer Upper
A property in need of repairs, often called a fixer-upper or distressed property, typically has issues like structural, fire, water damage, or mold. These homes often sell for less than their market value since they need anything from minor touch-ups to major renovations.
Fixer-uppers are commonly seen as distressed properties. Many regular buyers can’t get loans to buy them because lenders demand repairs. But cash buyers who don’t need loans can buy these distressed properties.
Can You Sell a Distressed Property In Detroit?
Yeah. You can unload a troubled property through the nearby real estate market or a cash buyer. But note, you can only sell if you’re dealing with foreclosure, own a fixer-upper, or your place is okayed for a short sale.
If your property is already foreclosed and the lender or bank legally owns it as an REO, you can’t claim it or handle its sale.
Considerations When Selling a Distressed Property
Before choosing a way to sell your distressed property, you should first look into several aspects of a home sale. Since distressed properties are meant to be sold faster than other real estate, there are three things you should consider.
Property’s Market Value
Many potential buyers may see the opportunity in your sale of distressed property.
To prevent this, ensure you conduct a comparative market analysis (CMA). This assesses home value by comparing it to similar properties nearby. You can hire a real estate agent for this or do it yourself.
If you have the means, consider getting a home appraisal. It provides a more precise understanding of your property’s market value. Adjust your expectations according to your distressed property’s condition. Factor in not just the offered money but also perks like all-cash offers, buyer-paid closing costs and repairs, no fees, quick sale timeline, etc.
Repairs
If the distressed house you’re selling needs fixing up, you need to figure out if you’ll make more money by fixing it or updating it before selling. This can help you decide if you should sell the property as it is or not.
But if the property is in trouble because of foreclosure, you have a short time to sell. You may see that even small repairs will take too much time. Getting a cash offer may be your only choice
Selling Timeline
Deciding how to sell depends on when you want to sell. If the property needs fixing up, you can pick when to sell. If it’s being foreclosed, you need to sell fast. Act quickly to sell before the auction.Using a real estate agent or selling by owner may not be best. You’d have to fix up and advertise, making the sale take longer.
How to Sell Distressed Properties In Detroit
Since we’ve already covered the types of distressed houses as well as your considerations when selling, let’s now focus on your different selling options. This has a huge impact on the success of your distressed sale.
Sell to Cash Buyers, House Flippers, or Buy and Hold Investors
The fastest and easiest way to sell your distressed property is by asking for a cash offer. Cash buyers, house flippers, and real estate investors who provide cash offers don’t have to wait for the approval of a lender or bank because they have cash on hand.
Sell Distressed Property As-Is
This means they can buy your home quickly to help you avoid foreclosure or bypass costly home repairs.
Additionally, if your property is in poor condition due to significant structural issues or being underwater, real estate investors won’t require any repairs that could worsen your financial situation.
They would gladly buy your distressed property as-is. That being said, you’ll save on upkeep and repair expenses and receive cash at the closing.
The process of selling distressed property to a cash buyer or real estate investor is quite straightforward. You simply need to visit their website or give them a call to receive an offer. A cash buyer will then conduct a walkthrough to assess the condition of your property and provide a more precise offer.
If you’re satisfied with their offer, they’ll send you an electronic contract for your review and signature to finalize the transaction. This will formalize the deal and indicate the sale’s closing.
Sell with a Real Estate Agent
Selling your distressed property with a real estate agent is an option if you have flexibility in the sale timeline. However, if you’re facing foreclosure, this traditional method may not suit you.
Keep in mind that selling with an agent and listing on the regular housing market means you’ll need an appraisal, repairs, staging, listing, marketing, and scheduling showings and open houses. Negotiations can also take weeks.
Selling a short-sale property with an agent may not be beneficial since you’re already starting at a loss. Agent fees or commissions would only add to your expenses.
We’d suggest selling with an agent only if your troubled property needs minor fixes or if you’re willing to make repairs for a better deal. Real estate agents offer valuable advice that can fetch high offers for renovated properties, but it comes at a cost.
Less Mobility
Owning a property makes it tough to relocate compared to renting. This could be an issue if you’re considering a job opportunity in a different city.While you can sell your home and relocate, selling may be a lengthy process involving real estate agents, depending on the local housing market. Plus, if you haven’t owned the property for long, you may not make much profit from the sale due to limited equity.
Taxes and Fees
Some of the regular fees you have to pay as a homeowner include property taxes, HOA fees, homeowners insurance, private mortgage insurance, utilities, and maintenance.Individually, the amount seems manageable, but if you look at it collectively, it can be pretty overwhelming, especially if you’re still paying for a monthly mortgage. If all these fees seem daunting to you, selling your home and renting makes sense.
4 Mistakes to Avoid When Selling Distressed Properties
A lot of distressed home sales are unsuccessful because sellers are new to selling real estate. To ensure that you’ll be able to sell your distressed property, here are some common mistakes you should avoid.
1. Setting a High Asking Price
Selling a distressed property aims to secure sufficient funds, but an excessively high listing price can deter potential buyers in the real estate market.
If you’ve assessed similar properties and determined the estimated fair market value of your home, ensure your listing aligns with this valuation. You may even consider pricing slightly below market value for quicker sale.
Alternatively, if you prefer not to grapple with setting an overly inflated price, consider selling to a cash buyer as they handle pricing arrangements.
2. Waiting Too Long to Sell
Homes in distress, facing foreclosure, need to be sold promptly to eager buyers. Otherwise, the lender will claim rightful ownership.
Delaying the sale, even with agent assistance, can raise your monthly mortgage interest rates, leading to deeper debt. It can also impact the buyer’s ability to qualify for a loan due to high rates.
3. Not Verifying Buyer Credentials
Selling a distressed property can get complex because it requires many financial choices. It gets even harder when you’re dealing with a dishonest buyer.
To be safe, do your homework to make sure your buyer has the funds to buy your property. This helps you avoid unpleasant surprises during the closing process.
A smarter move is to sell your investment property to a trustworthy cash buyer.
4. Not Disclosing Issues to the Buyer
If your property is facing foreclosure or requires extensive repairs, make sure to inform potential buyers upfront. Concealing these details could jeopardize the sale.
Many property owners fear that revealing such issues will deter buyers. However, honesty typically garners appreciation from buyers. Alongside disclosing any repairs or legal matters, highlight the property’s positive attributes as well.
Final Thoughts:
Selling Distressed Property In Detroit
The process of selling a distressed property is not the same for everyone. Figuring out how to sell and who to sell to depends on what kind of distressed property you have.
But usually, selling a home is doable. If time is of the essence, homeowners can focus on cash buyers and real estate investors who move fast on house sales.
At We Buy Houses in Metro Detroit, we buy distressed properties no matter their condition. We give fair cash offers and move fast to ease your burden of owning distressed property.
If you want a hassle-free offer, fill out our form or call us at (313) 710-7744.
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We Buy Houses AS-IS In Detroit
Our fast home sale service gives you advantages that pay off in profits to you. We are a local company that buys houses and land as professional cash home buyers, not agents or brokers. You can sell your house for cash in Detroit. Our goal is to serve homeowners with a simple selling experience and provides a financial solution for sellers. You can start to sell your house in Detroit and surrounding areas by calling us or filling in the online form. Within days, you can schedule a closing date and get cash for your house.
The Easiest Way To Sell Your House Fast In Detroit
You’re in the driver’s seat when you accept our cash offer for your house. We make the process simple, fast, and easy to follow when working with us. You have no obligation to accept our cash offer for your home when contacting us for a fair cash offer for your home. No matter the reason you want to sell your house, we want to buy your home as is. Remember that you get many benefits that include no real estate agent commissions, no cleaning, no improvements, and no stress. Our cash offer for your as-is house assures you of fast cash payment at closing with a reputable Title company. You can count on our company to give you a fair cash offer for your home! If you’re still thinking, “I need to sell my house fast”, calling us could be your best decision all day. 🙂
Author: Saini
My name is Saini, and I founded the We Buy Houses in Metro Detroit team with years of experience in the real estate industry. I have assisted numerous sellers in selling their homes quickly, “AS-IS”, and for a fair price.
He’s been featured in multiple publications including Yahoo Finance, GoBankingRates, LegalZoom, The Mortgage Report, Apartment Therapy, US News and World Report, and SuperMoney among others.