When shouldn’t you sell your distressed property in Fargo (or anywhere)?
Here at Autopilot Properties, we buy distressed property in Fargo, fix them up, and sell them (or rent them out).
Naturally, if you’re an owner of one of those distressed properties, we want to convince you why it’s a good idea to sell to us — but we also want to be upfront with you, because we want to do what’s in the best interest for Fargo and its residents: it isn’t always the best option. There are a few instances where you’ll want to sell your house in a more traditional fashion, either through a realtor or FSBO (“for sale by owner”).
In this article, we’ll discuss when you shouldn’t sell your distressed property.
A distressed property is a home that’s about to be foreclosed upon — or it’s one that the bank already owns.
If you aren’t actually in financial distress, if you’re still able to make your mortgage payments on time, then you have many more options still available to you. Even if your home is in a “depreciated state,” with the basement flooding every time there’s a storm, with holes in the walls or in the ceiling and doors, you still have time to make the necessary repairs.
In order to understand more about foreclosure, we recommend you check out our article, “Foreclosure Process Explained.”
If you own a distressed property, chances are you haven’t been able to fix it up to other buyers’ standards.
It’s hard enough to properly market a property to the general public in the first place. If your property is in need of significant repairs, the target market is that much smaller. Many families just want to turn the key, move their furniture in, and be good to go.
When you don’t want to (or can’t) make repairs, it makes sense to sell to a buyer like us.
However, if you can make the repairs necessary to get your house on the market, it might make more financial sense. The only problems, of course, is that the level of home repair might distract you from your time at work (or from the time you would otherwise spend looking for a new job), and the payoff might be less than you think, so you’ll have to weigh the pros and cons.
Additionally, unless you work as a contractor full-time, you have to consider that you’re not a professional. And, on that note, even professionals mess up from time to time. They make costly mistakes on building materials or deadlines that end up completely messing up their bottom line, but it’s okay because they have another few houses in the line-up. If they lose money on one, they can make that money up on the next one.
If you’re the owner of a distressed property and you have limited DIY skills, you only have one house that you’re working on, so you don’t have much wiggle room for mistakes.
On the flip side, when does it make sense to sell your distressed property?
Receiving a notice of default can be a traumatic experience for some, especially if you’ve gone through the process of foreclosure and eviction before. Some people react in different ways based on their upbringing — and even their genetic makeup.
So, there are some people who react to bad news by pretending it’s not happening at all. They simply shrug their shoulders and say, “the bank can’t do that.” Or they hold out hope that there’s going to be some saving grace, some divine intervention that’s going to stop them from being evicted, save their credit score, and pay off their mortgage in full.
If that sounds like you, consider doing something while you still can. Sit down and ask yourself, “Based on how the last few months have been going, is my situation likely to change anytime soon?”
This isn’t an easy process by any means, but as long as you come to terms with the situation, you still have time to explore your options.
On the flip side, maybe your career is going great. You’re making more money than you’ve ever made, but you bought a beat-up house a few miles away because you thought you’d try and fix it up in your spare time and put it back on the market for a profit. While the property isn’t technically “distressed,” it still might be putting a dent in your wallet.
The only problem is, with how your job is going right now, you don’t have the time to fix it up (and it wouldn’t make financial sense to take time off work to do so).
In that case, you might want to cut down on all of the expenses associated with owning a rental property and just get that capital back so you can make some other investments — whether that’s in the stock market, REITs, or your own education.
When doesn’t it make sense to sell your distressed property in Fargo? Or anywhere?
You shouldn’t sell your distressed property when it isn’t actually a distressed property. If you can still make your mortgage payments, you have a lot of time to explore your options. If you’re able and willing to make the necessary repairs, it also might make sense to put the house on the market in a more traditional fashion.
Keep in mind, however, that making those repairs takes time and skill — and even professionals mess up from time to time.
On the other hand, if you’re prone to ignoring the situation, if you can’t even bring yourself to think about the options you still have because it fills you with so much anxiety, it might make sense to sell to an online buyer while you still have the time. You don’t want your credit score to take the unnecessary hit of going to auction, barring you from all kinds of loans for the next few years. Additionally, receiving an offer might snap you out of it, opening your eyes to the reality that you still have some equity to work with.