when to lower your asking price on a house

When to Lower Your Asking Price on a House

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Has your house been sitting on the market for a while? Have you gotten any offers? You just don’t understand it: it’s a seller’s market, and maybe you chose the best time of year to sell, but still you have no offers. Perhaps the issue, then, is your asking price.

When is it time to consider a price reduction? And by how much should you lower your price?

4 Signs You Should Lower Your Asking Price

How long has it been on the market?

A house that’s set at the right price from the start will get offers within the first few weeks. If it’s been 5 weeks or more since you listed, it may be time to lower the price, or even delist it.

Delisting your house gives you a chance to make improvements and relist later, so the listing is “fresh” again.

Listen to Buyers

Have you had multiple showings but received no offers? This is an obvious red flag that something’s wrong.

Do not be afraid to ask buyers and their realtors for feedback. If the majority say, “It’s too expensive,” or “Out of our budget,” or the like, then it’s time to drop the price.

Know Your Market

We’ve been in the midst of a seller’s market for some time now. A lot of buyers are shopping the market, but inventory is low. Most times, this means properties sell faster, but the market does not guarantee a sale if the price is too high.

Search comparable properties in your area to answer the following:

  1. Are they selling fast or lingering?
  2. If they sold, how much did they sell for?
  3. What is the average time a house sits on the market (in your neighborhood)?
  4. How many houses (in your area) had a price reduction?
  5. How long did it take houses to sell after a price cut?

If you’re past the sell-by-date for your area, it may be time to cut the price or delist for a while.

Your Property Appraised Low

Buyers who take out a mortgage are required to appraise a property to confirm its value. If the house appraises too high or too low compared to the selling price, the lender may refuse to loan them the money.

Sellers should get an appraisal of their property to find out its true value and decide its asking price.

By How Much Should You Cut the Price?

Choosing when to reduce the price and by how much is never easy. The timing is important, and the price reduction must be worded just right so as not to raise buyer suspicion.

If the price is too low, buyers will think there’s something wrong with the property, and you may lose thousands of dollars. If it’s still too high, buyers will continue to avoid it to save their time and budget.

Most times, the average price cut is 2.9% of the list price. Your best ally, though, in changing the price is your real estate agent. They can tell you if the price is too high or unrealistic, and they should have an understanding of market trends to properly evaluate your property.

4-Point Price Reduction Strategy

  • Act Fast: if the number of showings versus offers in the first few weeks is not good, don’t wait to reduce the price. Otherwise, you may have to delist.

 

  • Be Realistic: sometimes a price adjustment, even one that’s slightly lower, is worthwhile, compared to accumulated mortgage payments and utility costs over the time of the listing. Ask yourself: what’s the lowest you can go but still make a profit?

 

  • What are Other Sellers Doing: again, look at comparable properties, with or without price cuts, and how long it took them to sell.

 

  • Reduce the Price ONLY Once: multiple small reductions go unnoticed by buyers. Make a single significant cut to jump-start interest in your property.

Sell for a Price Cut Out in Cash

Rather than speculate markets, buyers, and prices, consider selling to a real estate investor for a cash offer. Most investors pay cash for a property “as-is”, without warranties, inspections, or repairs. They cover all closing costs and additional sale fees, but you pick the closing date, which can be in several months, 30 days or less.

Most investors pay 70% of the market value AFTER repair value. But if the property is in good shape and in a good location, they’ll pay the market price or 2% to 3% less, which is still more than most sellers get with a traditional sale, since their agent takes a 3% to 6% commission.

Steps to Sell a Multi-Family Property

7 Steps to Sell a Multi-Family Property

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Selling a multi-family home is more difficult than a single-family because it involves more people. A multi-family property can be a multi-generational home, where families live together and share expenses and responsibilities, or it can be a dwelling with multiple units, each one with a family. We will discuss selling the former.

Step 1: Get Everyone on Board with the Sale

If you share your house with your parents, grandparents, sister or brother and their family, it’s not just your best interests at stake. Everyone has a voice in what happens to where they live. Will your extended family move with you into your new home? Will they move someplace else? Or maybe they’d like to buy the house from you – if that’s an option.

Discussing the house sale together is also a necessity if more than one person’s name is on the title. All owners must agree to the sale.

Step 2: Research the Market and Best Time to Sell

Market conditions often change. Determine if you’re in a buyer’s or seller’s market, and inquire with your real estate agent if it would be better to wait for a seller’s market.

Also, if you have the option and are not pressed to move right away, decide when you want to sell. Most people are of the opinion that spring is the best time for a house sale. But every season has its benefits and drawbacks.

We are still in the fall season, and though the market tends to cool down this time of year, that does not mean you’ll miss out on an opportunity. Buyers are actually more serious, and there’s less competition at the turn of winter.

Step 3: Get an Inspection and Make Repairs (Optional)

This step is optional because you can make repairs now, or negotiate them with a buyer later, after the inspection. The good news is you have more contributors living under your roof to help with repairs.

Step 4: Price Competitively

Pricing your property is important but tricky. Price it too high, and buyers won’t even make you an offer. Price it too low, and they suspect something is wrong with the property, or you’ll miss out on thousands of dollars.

You can do the following to help price your house:

  • Research comparable properties
  • Hire an appraiser
  • Talk with your real estate agent

Sites like Zillow or Redfin do not always provide accurate estimates because they lack information on your property. However, we can give you a fair market offer, based on the information you provide us. Just click below to request your free offer.

Step 5: Clean and Stage the House

When buyers visit for walkthroughs, they want to picture their lives in the house. Too much clutter impedes the vision and makes rooms appear smaller.

Working together, you and your family can pack and move belongings into storage. Whatever’s left you can donate or throw away to make your eventual move less of a hassle.

Be sure to do a mass cleaning inside and outside of the house and stage rooms to encourage the buyer’s vision.

Step 6: Market Effectively

If you sell your house For Sale By Owner (FSBO), you’ll have to list the property and market its availability all on your own. Potential buyers are found online nowadays, through property listing sites and social media. It requires constant attention, updating details and answering inquiries. If you have a good real estate agent, they will do all the work for you.

Step 7: Clear Out During Walkthroughs

The best thing you can do to get an offer is clear out of the house during showings. Let your realtor show off the house, while you and your family go out for the day.

Sell Your Multi-Family Property without Stress

If you want to sell your multi-family property without cleanings, showings, or inspections, consider accepting an offer from a real estate investor. Most investors pay cash for a property “as-is,” be it damaged, neglected, or have a great big mess inside. Investors will even buy a house with discarded belongings, if you want to lighten your move.

Investors do not require traditional sale warranties or inspections, and if you don’t have a realtor, there’s no commission fee. You can even sell the house virtually, without the investor ever visiting the property. All you have to be concerned with is the closing day, which is up to your discretion and can be in several months, 30 days or less.

Common House Selling Mistakes

8 Common House Selling Mistakes

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A house is the most expensive item you’ll ever sell, and mistakes are costly. There are so many hurdles to jump, and one misstep can bomb your finances and house sale. Here are eight common house selling oversights you’ll want to avoid.

Mistake #1: Pricing It Wrong

Pricing a property is tricky. If the price is too high, buyers will not touch it because it’s out of their budget. If the price is too low, they’ll think something’s wrong with the house, or you’ll miss out on thousands of dollars.

Do not trust online sites, like Zillow or Redfin, to accurately value your property. These sites lack the information necessary to estimate its value. Instead, ask your real estate agent for a comparative market analysis that shows how much properties like yours are going for in your area.

Your realtor should be able to suggest a fair price. It may be a good idea, though, to get an inspection and deduct repair costs.

Mistake #2: Not Expecting House Selling Costs

It is a big mistake to assume that selling a house does not cost you money. There are all sorts of fees that you, as the seller, are responsible for, including:

And, of course, the cost of your next home is a factor too. If you are not prepared to pay these expenses, you’ll have trouble making a profit or even breaking even with your sale.

Mistake #3: Selling It by Yourself

Going the For Sale By Owner (FSBO) route is not impossible, but it’s a lot of work. You may do it to avoid paying commission, but the truth is, a good realtor is worth their weight in gold.

A good real estate agent handles all sorts of responsibilities, including:

  • Performing real estate market analysis;
  • Helping price the property;
  • Listing it on the MLS;
  • Running advertising campaigns;
  • Answering phone calls and emails;
  • Scheduling appointments;
  • Hosting showings; and
  • Managing communications with buyers

If you sell FSBO, in addition to these tasks, you’ll be dealing with buyer-requested repairs, possibly shopping for your next house, packing and moving. Spreading yourself too thin can jeopardize your sale.

Mistake #4: Bad Listing and Advertising

Buyers today shop for houses online. In fact, more than half of last year’s shoppers found their new home through online listings.

A bad listing, improperly worded and featuring bad photos, will lose buyer interest right away. Moreover, if you do not take advantage of online and offline advertising, you miss the opportunity to reach more potential buyers, and thus miss out on a better offer.

Mistake #5: Failing to Winterize and Perform Maintenance

The worst thing a homeowner can do is neglect to care for their property. As long as you own it, and that includes while it’s listed for sale, you need to perform weekly, monthly, and annual maintenance to keep the property functioning and safe.

Winter care is especially important. Perhaps one of the most common incidents is frozen pipes bursting and flooding the house. So make sure your property, whatever the season, is ready and will pass a home inspection.

Mistake #6: Skimping on Staging

Buyers want to envision themselves living in the house. Too much clutter impedes that vision.

Staging has a dramatic impact during walkthroughs. If done right, it can showcase how spacious rooms are and give buyers an idea of what it’d be like if they lived there.

Whatever you do, do not show an empty house. If you’ve already moved, rent furniture or hire a professional stager to model the home.

Mistake #7: Failing to Clean

How would you feel if you went to an open house, and the bathrooms had soap scum, dishes were piled in the kitchen sink, and belongings were strewn about the rooms? You’d no doubt be put off, right?

Keep the house clean to make a great first impression every time.

Mistake #8: Signing a Bad Contract

You must be well-informed of the details in your real estate contract. Know your rights and responsibilities before signing, and do not be afraid to go over it with your realtor or a lawyer. If you blindly sign, you may be agreeing to a bad deal that costs you thousands of dollars.

Selling to an Investor, aka The Best Decision You’ll Ever Make

If you want to sell fast and avoid all house selling issues, consider selling it to a real estate investor. Most investors offer cash for a property “as-is,” be it damaged, neglected, or vacant. They do not deal in traditional sale warranties or inspections, but pay all closing costs and additional sale fees, actually saving you money.

Moreover, you choose the closing date, which can be in several months, 30 days or less. You’ll enjoy a quick closing and maybe use your cash proceeds to buy a new home.

little girl selling a house with kids

How to Sell a House with Kids

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Selling a house is enough of a juggling act without adding kids to the bustle. We love our children, but they do not understand a house sale, or why strangers (i.e., your buyers) are walking through their home.

Believe it or not, your children could drag out a house sale. Every child’s superpower is to make a mess, get underfoot, and take up your time and energy. You’re exhausted keeping up with them, and you’ve no energy left to clean and stage for walkthroughs.

67% of all home sellers have at least one child living at home, so you’re not alone. Here are 8 steps you can take to get to closing day faster in spite of your kids.

Step 1: Deep Clean

Send the kids to a friend’s house and spend the day cleaning. Hire a professional cleaning service, if you can afford it. Otherwise, you are responsible for crayon on the walls, juice spills on carpets, handprints on windows, etc.

Clear the toys in the hallway and put all belongings in their proper place. You’ll have an easier time staging rooms if the messes are cleared away.

Step 2: Get Rid of Clutter

Kids are really good at spreading their toys throughout the house. Toys seem to accumulate everywhere, and it’s too much. The same happens with adults – we all collect and hoard.

It’s time to get rid of the clutter! With your child’s help, fill a box with toys they can part with, and fill some boxes of your own. Donate these, and then get a head start on packing.

Be mindful of eyesores, like the Barbie Playhouse or the Play Kitchen, and put these out of sight.

Step 3: Paint Over Kid-Themed Walls

Buyers want to envision their own lives in your house. Your child’s room, with its brightly painted colors or cutesy wallpaper with the animal prints, can overwhelm visitors.

Best thing you can do is paint over the walls in plain white or with a color that is not so loud. This way, buyers can picture the room to be anything they want, and they don’t need to worry about painting over the walls themselves.

Step 4: Take Photos of the Staged House

While the kids are away, and the house is clean, take photos of its staged rooms for its listing. This way, buyers know what the house looks like when it’s at its best.

Step 5: Remove Yourself and the Kids from Showings

If you have a realtor, let them manage the walkthroughs, while you take the kiddos out for the day. If you are selling FSBO, ask a friend or family member to watch the children while you entertain buyers.

Sell the House “AS-IS” to an Investor

If you want to forgo all this work and sell in less than 30 days, consider selling to a real estate investor. Most investors make a cash offer on a property, no matter what condition it’s in, be it damaged, neglected, or outdated. They do not require traditional sale warranties or inspections and will pay all closing costs and additional sale fees, saving you money.

Investors most times do not even need a walkthrough. You can show them the house virtually, over a webcam, or send them photos and videos of the property in its current condition.

home seller nightmares frustration

8 Home Seller Nightmares and How to Avoid Them

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Every house sale has bumps in the road. Some are unavoidable, while others can be prevented or resolved by the right means and with the right resources. Here are 8 possible issues that can quickly turn selling your house into a nightmare, and what you can do to prevent them.

1. Structural Issues

Structure damage to the foundation or underlying structure of the house, mold, termites, flood, or fire damage, all deter buyers from making an offer. The bones of your house should not be compromised.

Have an inspector come through, then resolve all issues before listing the property.

2. Lender Drops the Ball

Though rare, it is not impossible for a buyer to get a bad lender. Lenders are responsible for paperwork, necessary filing, and approval of the loan. If they misplace documents or miswrite information, your house sale can drag on and cost you more money.

Since the buyer chooses their lender, there’s not much you can do. But your realtor can nudge things along and keep an open channel of communication between you, the buyer, and their lender.

3. Buyer was Pre-Qualified, but Not Pre-Approved

It happens more often than you think: a buyer gets pre-qualified for a loan, but not pre-approved. The reason is pre-approval requires a more rigorous screening process, and a bad credit score or outstanding debt is often met with rejection.

To avoid this situation, require your buyers to submit a letter of approval from the lender when they put in an offer.

4. Faulty Appraisal

The lender requires an appraisal of your property to confirm it’s worth the loan amount. If you live in a hot market, and properties in your area are selling for more than the asking price, your house may not appraise well. A bad appraisal can result in the buyer not getting their loan.

To combat this, your realtor should gather property appreciation values in the area to argue the appraised value, or negotiate adjustments to the purchase agreement.

5. Repairs are Not Made in a Timely Manner

When a home inspection finds issues, buyers ask for repairs. You hope repairs will be fast, easy, and affordable, but sometimes you get a bad crew, or they uncover additional problems. Either way, the longer repairs take, the more money you lose, and the buyer may find a more attractive deal elsewhere.

Again, the best thing you can do is get your property inspected before listing. You can then calculate costs and project a timeframe for repairs, and screen professionals to make repairs.

6. Bad Realtor

Your real estate agent can make or break a deal. A good agent should do everything in their power to find buyers, gather offers, and expedite the sale process. They should also care about getting you a great offer since they take a 3% to 6% commission fee.

Do your research. Screen realtors carefully and check online reviews. Ask friends or family if they recommend a realtor. Look for someone who is knowledgeable and experienced, but also likable and tech-savvy.

7. Property Sits on Market, But No Attention

You can do all the right things, but the longer your house sits on the market, the less attractive it becomes. Buyers think a house that sits too long must have something wrong with it.

You can offer financial incentives and/or price it below the market value to spark new interest.

8. Bad Neighbors and Other Put-Offs

You cannot help where you live or who lives next door to you. Bad neighbors run off buyers with their eyesore lawns and loud, nosy personalities.

But maybe it’s not your neighbors. Maybe your property sits near an airport or busy highway or is in a bad part of town. If it’s outdated, cluttered, or in desperate need of maintenance – these are all issues that make a house unsellable.

Some things you cannot fix. The best you can hope for is to sell to a desperate buyer or a real estate investor.

Sell Your Nightmares to an Investor, aka The Dream Sale

Real estate investors will buy properties, with cash, in any location in any condition. The house can be damaged, rundown, or a hoarding space – they will buy it “as-is.” Investors also void traditional sale warranties and inspections and pay all closing costs and additional sale fees.

You can walk away from your problem property in less than 30 days, forgo home seller nightmares, and use the cash proceeds for a down payment on your new dream home.

how to sell a haunted house

Can You Sell a Haunted House?

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A haunted house? Seriously? Yes. Selling a haunted house is not an unusual inquiry, especially during October, the spookiest time of the year.

64% of millennials and 55% of baby boomers say they’d be willing to purchase a haunted house.

There are four states that deal with paranormal activity or the supernatural in their real estate disclosure laws. We will go over these and answer two questions: (1) can you sell a haunted house, and (2) how?

States that Deal with the Paranormal in Housing

New York, New Jersey, Massachusetts, and Minnesota discuss the paranormal in real estate.

New York says that a court can overturn a house sale if the seller was not forthcoming about the property’s ghostly reputation, after spreading rumors that it’s haunted. An example: let’s say your New York condo features on a reality ghost hunters television show. If later, you sell the place without telling the buyer it’s haunted, the court can cancel the sale.

New Jersey insists that if a buyer asks about phantoms, the seller disclose the truth.

Massachusetts and Minnesota directly mention “paranormal or supernatural activity” as a “psychologically affected” attribute of a property that does NOT need to be disclosed.

States that Deal with Death in Housing

Other states, while not acknowledging hauntings, do insist that a death on the property be disclosed.

In California, a death on the property must be disclosed within three years. In Alaska, within one year.

Connecticut, Delaware, Georgia, New Hampshire, New Jersey, and South Carolina all state a death on the property should be disclosed only if the buyer asks.

South Dakota insists a homicide must be revealed to buyers.

Whether or not you believe a death on the property is followed by the spirit haunting the premises does not matter in these or other states not mentioned.

How Do You Sell a Haunted House?

Can you sell a haunted house? Yes. On a rare occasion, with the right audience, it can be a selling point. Most times, though, it discourages buyers who believe in the mysterious and unnatural. So what can you do?

1. First things first: confirm you live in a haunted house

Sometimes weird occurrences can be explained. Get the house inspected for maintenance issues and make repairs. If, after doing this, strange things keep happening, keep a log to establish a pattern that points to the paranormal.

2. Talk with a realtor

If your house is haunted or cursed, or where a homicide, suicide, or other criminal activity occurred, or as they call it in the real estate industry, is “psychologically impacted” or a “stigmatized property,” talk with your realtor about associated laws and selling options.

3. Unless Law Requires, Say Nothing

If you live in a state where real estate disclosure laws do not require revealing deaths and hauntings, why say anything? If after you sell, the buyer claims the house is haunted, they have to prove to a court first that the house is in fact haunted, and then that you knew about it. Impossible, right?

Sell the Property and Its Ghosts to an Investor

Real estate investors are not afraid of no ghosts. They will pay cash for a property “as-is,” be it damaged, neglected, or inhabited by spirits. The investor buys without traditional sale warranties or inspections, and covers the closing costs and additional sale fees. You can offload your haunted property in less than 30 days and use the cash proceeds for a down payment on a new house with no specters.

decorating house for Halloween

How to Decorate for Halloween If Selling a House

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Decorating for Halloween is great fun, but be careful if you’re trying to sell your house. You may frighten off buyers. I’m all for skeletons and ghouls, and lots of pumpkins round the mantelpiece, but when buyers visit, they want to envision themselves living there. Bones, blood, and gore distract from that vision.

Do not get discouraged though: you can still decorate for October. Here are 5 tips on how to decorate for Halloween if you’re selling your house, so spirits and buyers feel welcome.

1. Keep It Outside

The less you clutter the inside of your house, the better. You want to create the illusion of space and NOT distract buyers who imagine living there. After all, you’re not showing a haunted house, though that’d be more fun, right?

Stick to decorating the outside of your house, but make sure your decorations are not too scary. You do not want to take away from your curb appeal when buyers pull up.

You can put out faux pumpkins and planters, a creepy, but charming wreath, and a pleasant foot mat that welcomes fall or trick-or-treaters.

2. Do Not Go Overboard, and Think Safety

Turning your front yard into a cemetery, or covering it with inflatable ghosts distracts from the house. Buyers can even miss the “For Sale” sign out front.

Also, do not clutter the front stoop. The last thing you need is a buyer or their realtor tripping over decorations. You can decorate, but leave an open footpath, so visitors can come and go without trouble.

3. The Inside Is Not Completely Off Limits

While you don’t want to over decorate inside, you can still add some hints of the Fall season. Embrace the color scheme with autumn accents, like pillows and a nice throw in the living room, or candles and towels in the bathroom. Even glass candy dishes, full of treats, in the kitchen are acceptable.

But again: avoid clutter and being too scary.

4. Take Snapshots Before Decorating

Before decorating, take photos of the inside and outside of your house for its listing. Buyers should see how the house looks “at its best” (on a regular day) when they search it online. Make it presentable, clean and ready for move-in in your pictures.

5. Clean Up as Soon as the Holiday Is Over

When Halloween is over, put away the decorations on November 1st. Buyers find post-holiday decorations tacky and detracting from the house.

Sell Before the Holiday

If you are eager to move – maybe you are getting ready to close on another house, or you just want Halloween to be a thriller and not deal with twitchy buyers, sell to an investor. Real estate investors are not superstitious or put off by ghouls and goblins. They’ll actually give you a treat: a cash offer for your property “as-is,” no repairs or renovations necessary.

Want another treat? An investor requires no traditional sale warranties or inspections, and they pay all closing costs and additional sale fees. You pick the closing date, which can be in less than 30 days, and move just in time to enjoy trick-or-treating in a new neighborhood.

woman stressed over property liens taxes

How to Sell a Property with Liens on It

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Can you sell a house with liens on it? Yes, but there are complications and exceptions, and a lot of red tapes to cut through. It depends on the type of lien, the type of buyer, and how much is owed versus your equity in the property. Let’s dive into this deeper.

What Does It Mean to Have a Lien Against Your Property?

A lien is a legal claim an entity places against your property to use it as leverage to satisfy the debts you owe. Liens are placed by different entities for different reasons.

  • Tax Liens: Filed by federal, state, county, or city.
  • Mortgage Liens: Or property liens, filed by the lender.
  • HOA Lien: Filed by the Homeowner’s Association.

Liens are defects on the property title, and traditional buyers typically want a clean title. So you’ll have to take care of your dues before you list the property.

How Do I Resolve a Lien?

There are four options available to you to resolve a lien on your property:

  • Pay Off What You Owe: Before you sell your property, pay the lien and clear it from your title.

 

  • Pay It with the Home Sale Proceeds: If you cannot afford to pay the lien out of pocket, you can use the home sale proceeds to cover the difference. At closing, the lien is deducted from your earnings.

 

  • Take Out a Bond: Bonds are expensive, but it’ll cover the cost of the lien so that you can sell the property.

 

  • Dispute the Lien: Sometimes an error has been made by the creditor, and a balance was recorded incorrectly. You’ll need the help of an attorney to argue this, and that’ll cost you, but maybe not as much as what you are being charged by the creditor.

What Happens If I Don’t Pay the Lien?

If you and the creditor cannot agree on a solution, the creditor could seize your property. It depends on the type of lien and the creditor.

Let’s say there’s a tax lien against your property. If you fail to pay, the creditor can issue a tax lien certificate, then sell it at auction to recoup the money. Often it’s an investor who buys the certificate. If you want to recover your property, you’ll pay the investor your outstanding debt plus any interest and fees.

Once you satisfy the debt, the lien is lifted. But if you fail to pay, then the lien certificate holder can enforce the lien and take possession of your property.

Sell Your Property to a Real Estate Investor

It is very hard to sell a house with a lien on it to a traditional buyer. You can, however, sell it to a real estate investor for cash “as-is” – no repairs or renovations, no warranties or inspections necessary.

Investors buy foreclosed and bankrupt properties or houses with liens on them all the time. Sometimes they will purchase and take responsibility for the lien, depending on the type and how much is owed.

The investor will cover all closing costs and additional sale fees. You choose the closing date, whether it’s in a month, 15 days or less. You can enjoy a quick closing, pay off the lien, and start over with a new house, using any cash leftover from the sale.

rental tenant files for bankruptcy

What to Do if a Tenant Files for Bankruptcy

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One of the biggest issues a landlord can face is a non-paying tenant. When that happens, if the tenant does not leave voluntarily or by request, you start the tedious eviction process. But what if the tenant files for bankruptcy? Then the situation becomes more complicated.

What Happens When a Tenant Files for Bankruptcy?

Any rent incurred before the tenant filed for bankruptcy might be up for review as unsecured claims. You can discuss the issue with the tenant’s bankruptcy trustee.

There are four types of bankruptcy, but the two most common that tenants file for are Chapter 7 and Chapter 13.

  • Chapter 7 bankruptcy: also known as straight bankruptcy, is for anyone with a lot of unsecured debt (e.g., credit cards, medical bills, personal loans, etc.), and the debt is dismissed.

 

  • Chapter 13 bankruptcy: also known as reorganization, is for anyone who faces short-term financial setbacks, like the loss of a job, long-term illness, or unexpected expenses, and reorganizes their debt into a payment plan.

Either type, when filed, results in the court granting the tenant an automatic stay. This statutory injunction prevents you from evicting the tenant.

How Do You Respond to Tenants Filing Bankruptcy?

If you think your tenant is going to file for bankruptcy, you best start the eviction process before they file. Seeing as how no one is clairvoyant, however, there are measures you can take when bankruptcy is filed:

  • Know the Exceptions: There are always exceptions to a mandate. You can still evict the tenant for other reasons than they refuse to pay. Reasons include damage to the property, criminal activity, or health ordinance violations. Confirm exceptions with a court authority or the tenant’s bankruptcy trustee.

 

  • Talk (Often) with the Tenant’s Bankruptcy Trustee: This individual is responsible for the tenant’s financial affairs and distributes assets to creditors. You are owed rent, but as to when you get paid, you’ll have to take that up with the trustee. At least they can keep you in the loop and explain proceedings and your options.

 

  • Sell the Property and Start Over: This option seems a bit extreme, but perhaps there are other reasons to sell: the property is old and outdated, in constant need of repair, has costly maintenance and utilities, and high property taxes. It may be time to start over somewhere else. You can sell the property and use the proceeds to buy a new rental in a better location.

Sell to a Real Estate Investor

Traditional buyers do not want to buy a rental with non-paying tenants. Consider then selling it to a real estate investor. Most investors will offer cash for a property “as-is,” be it damaged, vacant, or have bad tenants still living there.

Investors do not require traditional sale warranties or inspections. They pay all closing costs and additional sale fees, and you pick the closing date. Depending on paperwork and other issues (e.g., liens or taxes due), the sale can close in 30 days or less.

You can enjoy a quick closing, offload a problem rental, and start over with a better rental, using the profit from sale.

How to Sell a Rental Without Evictions

How to Sell a Rental Without Evictions

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Landlords are looking for a way out amid the federal eviction moratorium. Unpaid rent is mounting, and anyone with a mortgage on their rental property fears foreclosure.

Federal and state authorities continue to impose moratoriums on evictions out of concern for the spread of the new delta variant. But what does this mean for landlords?

What Does the Extension Mean for Real Estate?

The moratorium temporarily stops you from evicting your non-paying tenants. This extension will last till October 3rd. These halts started at the beginning of the pandemic and now millions of people owe billions of dollars in back rent.

Landlords can file for COVID Emergency Rental Assistance, but the $47 billion (so far) owed in federal rental assistance has been slow to pay out.

The number one reason for becoming a landlord is to earn a passive income. Rent payments help cover the mortgage, taxes, maintenance, utilities, and repairs on your rental. But no money means impending debt and foreclosure. The majority of landlords, big and small, therefore are selling their properties.

What Are Your Options?

Hold onto Your Properties

If you own your properties and are financially stable enough to afford their upkeep without rent payments, by all means hold onto them. You are in a better situation than most landlords.

Hopefully, you are not paying a double mortgage on the rental and your primary residence. If you fail to make payments on either property, foreclosure is almost certain.

Know the Exceptions

The moratorium provides exceptions to evicting your tenants. These exceptions include:

  • Criminal activity
  • Property damage
  • Health ordinance violations
  • Threatening the health and safety of other residents (does not include COVID-19)
  • Breaking of other lease provisions

You may want to check with a lawyer or court authority to confirm moratorium exceptions.

Sell Your Rental

Typically, if you were to sell a rental, you’d wait till the tenant lease is up or transfer the lease agreement to the new owner. However, if you own a rental with non-paying tenants, damages, or liens, no traditional buyer will be interested.

Your best option, then, is to sell to a real estate investor. Most investors pay cash for a rental “as-is,” be it damaged, vacant, or have bad tenants still living there. An agreement can often be struck between you and the investor to settle liens with the cash proceeds, or the investor will shoulder the responsibility of paying them.

Investors do not require mortgage approval, traditional sale warranties or inspections. They also pay all closing costs and associated sale fees. The best part is you pick the closing date, which can be in several months, 30 days or less.

You can enjoy a quick closing, offload your problem rental, and maybe start over with a new rental in a better location, once the moratorium is removed.