After you experience bankruptcy, you experience many challenges; selling a house is probably one of them. The emotional and financial challenges wrapped up in these situations are one side of things, but what about the other, more tactical side? Is it possible to sell a house after experiencing bankruptcy? What does the process look like? How many potential buyers are out there for post-bankruptcy houses? All relevant, important questions for post-bankruptcy homeowners to explore.
To begin to unravel this complex, emotionally charged process, sellers will first need to understand their rights of property ownership shortly after declaring bankruptcy. This will consist of a deep understanding of where the lines get drawn in terms of who ends up owning what—and when. And what happens to all the liens and debts that are on the property? I would suggest any distressed property owner begins there—with a distressed property specialist. A local real estate professional.
Frequently Asked Questions
Yes, it is possible, but it may be a complex problem. When you file for bankruptcy, your assets, such as your home, become part of the bankruptcy estate. You might be able to sell your house if you can show that it is in the best interest of your creditors to do so. Of course, consult with a bankruptcy attorney to understand the specific facts of your case.
There is no easy answer to this question. It could be, well, “it depends.” Under normal circumstances, if I had to give a range, you might expect it to take a few weeks to a few months. Based on the specifics of your house, it may (or may not) take longer. The wild card in this situation is that you will need to get the court to agree to this sale. In other words, the court has to give a “green light” and say “yes” to you selling your house with the proceeds being used to pay off creditors, et cetera, and this timeline is affected and influenced by many issues, such as possible appraisals, home inspections, and negotiations with prospective buyers.
If the value of your house is less than what you owe, you could be “underwater” in a house. In this specific instance, your lender might not be able to give you more money than what the sales price of the house might be. The money from the sales transaction will not be able to pay off the balance of the mortgage. If this situation applies to you, you might be able to enter into a “short sale” with the lender. This is a complex problem and, again, is very “fact specific.”
Understanding Bankruptcy and Its Impact on Real Estate
Bankruptcy is a federal court process that lets you get rid of debts totally or in-part, depending on the type. Chapter 7 and Chapter 13 are the types that are most often used by individuals. Chapter 7 is by far the most often-declared type, and it is the one that most people picture when they think of bankruptcy. With Chapter 7 bankruptcy, all non-exempt assets are liquidated and distributed to your creditors in exchange for a full discharge of all qualifying debts.
You don’t get to include or exclude debts like you do with Chapter 7 bankruptcy during the bankruptcy process. After 3-5 years of payment, whatever balance is left on your unsecured debts is discharged, effectively treating them as a short-term IOU.
Your previous living situation will play a big role in your life after bankruptcy. Maybe your rent was so high because your entire paycheck goes to your credit card payments. Perhaps you look forward to a newfound financial independence free from the shackles of your credit card limits. From your finances to your lifestyle, all are bound to change due to drastic changes in your spending habits and budget. When you transition to a new job, it changes all aspects of your life—your off-time activities, the money in your bank, and your office uniform. If this is the point you’re at, a bankruptcy attorney can give you an idea about where you are financially so that your transition doesn’t end up disastrous instead of syncing.
Assessing Your Situation
After bankruptcy, your financial standing will change, and you must assess your new reality to start rebuilding your financial health.
- The condition of your house:
Does it need any repairs? The cost of those repairs might be too expensive for your immediate future. Assessing the damages will give you the necessary information to plan and prioritize how and when you can get what done according to your spending abilities.
- The current market value of your house:
A real estate professional will be able to assist you with this. They can provide you with a Comparative Market Analysis (CMA) to help you understand the market trends in your region. The current Comparative Market Analysis (CMA) can help you understand the local market and its trends.
Options for Selling Your House in Marysville
In a comparison of selling methods, there is no one-size-fits-all strategy. If you sell your house through a traditional real estate agent, they will help you price your home correctly, get your house “show-ready,” devise and execute a marketing plan to get your listing in front of as many buyers as possible, and negotiate the highest price for your home. All those transformations take time (up to a couple of months), money (a few thousand dollars for updates, home staging, and professional photography), and effort (staging, depersonalizing, and cleaning up at a moment’s notice for a home showing).
Or, you can sell your home “As Is” to We Buy Homes For Cash programs. Almost all houses will qualify, and you may even be able to close and get paid within a matter of days. There is no additional stress of a home inspection, finding and making any home repairs, or negotiating with a buyer to make repairs. The sale is typically not subject to an appraisal by the buyer’s lender. Any fees are usually deducted from the sale’s proceeds, which means less stress about coming up with the money you may not have. And better yet, there isn’t an onslaught of paperwork to “sign here” and “initial here.”
There is the option of putting your house up for auction or as a short sale, but neither comes without ramifications. In a sellers’ market or to avoid having a foreclosure on your credit report, they might be options to consider.
The Selling Process
If you are preparing to start the process of selling your house, you need to organize the right documents: title deed, mortgage info, and any other disclosures about your property. This is the type of work that speaks to buyers on a very deep level as they recognize that you are transparent, honest, and very prepared in the house selling process. An organized home is great, but organized documents are what the highest levels of organized and neat people appreciate.
Before you ever start the selling process, consider what amount you would expect to sell your house for. Then bring in a property expert to conduct a market analysis on your property. This type of process brings clarity as it will help you understand the current market in your area. Look at other types of similar comps sold by your real estate coach to help you better gauge what houses similar to yours have sold for in the last few months. Asking price vs. time on the market is huge, and really can’t be overstated. The higher the cost, the longer the expected time to sell. Ask for a reasonable number!
They say, at least in high school English classes, that 90% of writing is rewriting. So, as you put in the energy to get your property ready, of course you need to keep showings in mind. This is a huge opportunity for you to get a sale, whether through an OK or a high selling price. A strong place to be showcased is on a realtor’s online listing or social media.
Legal Considerations
You will need to clear various hurdles before selling a home after bankruptcy. The specific legal requirements you face will depend on your jurisdiction, but in most cases, you must get permission from the bankruptcy court before you can go through with a sale. This is because your property may be part of your bankruptcy estate, and the court has an interest in making sure that you handle your assets in an orderly way, as it will improve your chances of getting unsecured debts discharged. Your creditors know that if they want to get paid, they have to come to the bankruptcy court and ask for money.
You should plan on telling your mortgage lender and the rest of your creditors what you plan on doing because you can negotiate the terms of your trade. Your creditors will have special rights, depending on the next steps that you plan on taking. This is a confusing topic, so we encourage you to contact us to discuss these issues.
If you owe money on your home, either through a mortgage or other secured lien – or someone else obtains a judgment against you for breach of contract, you better make sure that the person you owe signs a release allowing you to quit your claim and sell the home free and clear of your interest, especially if you try to sign your house over to your relatives
If you’ve experienced bankruptcy and you’re a homeowner in Marysville, selling your house could be a strategic move for several reasons:
When you’ve been given a fresh start and you want to keep it that way. Selling will relieve you of the financial (and psychological) obligations you might feel about keeping up a property you can no longer afford. The fair and transparent way We Buy Houses As Is does business will help to drive your credit score up and keep it up by guiding you to make the transactions that not only empower your present credit situation but also create the necessary momentum for subsequent ventures generally made easier with improved credit scores.
Conclusion
We Buy Houses As Is. There are no conditions to meet: the land could be barren with dead shrubs and grass, and with pest and termite infestation, you’ll still get a competitive offer to buy the house.
Simplification, a service we provide absolutely free. We don’t want someone who’s trying to regain their footing to have to spend time and money on beautifying an old house before you would bother considering a deal.
Immediate liquidity and how it might affect you; it’s hard to say that nursing your home’s value to selling strength is any more important than the other—it’s very contextual—but this is certainly a good contender.
[If you don’t want to sell your house in Marysville/you don’t know what you want and you want to find out what you should want, please connect with us for a riskless consultation of what your best options are—and that might involve selling.]