Say you’ve had your home for sale for months and not a single home buyer has decided to make an offer to you. You’ve spent a lot of money on home advertising, made a number of price reductions and nobody calls you. Maybe your agent now has an expired listing. It’s possible that you’ve even buried a St. Joseph’s statue in your yard, and that didn’t bring any offers, either. What can you do when it’s plain that your home isn’t selling?
1) Postpone Home Selling
Could it be that now is not the time to sell? If it’s a buyer’s market, perhaps you should take your home off the market and wait for inventory to drop. When there are fewer homes for a buyer to choose from, your home may be snapped up.
- Selling during the holidays is especially tough because buyers expect bargains. You may lose money if you try to negotiate during holiday stresses.
- Selling in the winter is more difficult than during warmer months because there are typically fewer buyers.
- If you can afford to wait, selling in spring might bring an offer because spring months bring more buyers into the marketplace.
2) Take Out a New Mortgage
If your need to sell is based on financial needs, it might make sense to take out a home equity loan, providing you can afford to pay a higher monthly payment. If your existing loan is an adjustable rate mortgage, and a higher interest rate has raised your payment to the extent that you can no longer afford to pay it, you might be able to renegotiate a loan modification plan with your lender or convert that ARM into a fixed-rate mortgage at a lower interest rate.
Before you decide to borrow more money, through a refinance of your existing loan or by taking out a second mortgage, first meet with a trusted adviser to discuss your financial situation. Don’t talk with any real estate professional who has a vested interest in your affairs. Speak with a tax accountant or your real estate lawyer.
3) Rent Your Home
Some home sellers have no choice. For a variety of reasons, from job promotions to family-related matters, a home seller might be forced to relocate to a new area and leave an existing home behind.
Even if you can’t receive enough rent to cover your mortgage payments, paying a small amount of negative cash flow every month might be easier on the pocketbook than forking over thousands of dollars for a vacant house.
Here are a few tips about renting:
Be aware that many homeowner insurance policies do not cover a vacant house for more than 30 days; however, you may want to talk with your insurance agent about changing the policy to insure only the structure without contents.
Hire a reputable real estate management company to screen tenants and hire tradespeople if repairs become necessary. You don’t want midnight calls from tenants if a toilet leaks.
Ask neighbors to keep an eye on your home and to notify you if they suspect problems. Give them your e-mail address or cell phone number to call in the event of an emergency.
4) Consider a Short Sale
If you’ve purchased your home within the past few years, it’s possible that you owe more than your home is worth. A real estate agent who specializes in short sales might be able to negotiate with your lender to accept less than your mortgage balance. Before you consider doing a short sale, here are a few things you should know:
Discuss the ramifications with a real estate lawyer to make sure you understand the consequences. Moreover, not every seller qualifies for a short sale, and not every lender will accept a short sale.
Realize that short sales affect credit, and redeeming a pre-foreclosure on your record could prevent you from buying another home for a while. You may owe the IRS taxes on a short sale. You may receive a 1099 from the lender for the amount of forgiven debt.
5) Offer Your Home on a Lease Option
You might talk to your real estate agent about doing a lease option purchase versus an outright sale. Lease options are appealing to borrowers who, for a variety of reasons, might not be in a position to purchase a home through conventional financing. Maybe they can’t decide whether to buy or rent. Make sure your lawyer reviews all documents before you agree to a lease option.
Lease options give a tenant the opportunity to later purchase your home at a predetermined price. For a tenant who is on the fence about buying a home, it lets them live there while deciding whether to buy.
Typically, lease options payments are higher than a regular rent payment, which might eliminate negative cash flow for you.
A tenant who has a stake in the home might take better care of the home, and sometimes lease option agreements make the tenant responsible for all repairs.
6) Ask Your Employer About Relocation
If your employer is transferring you out of town, you might ask about a guaranteed purchase program. Many employers hire relocation companies that offer buy outs for employees. You might not even know that your employer has a relocation program if you don’t ask.