Why Sellers are Looking to Sell their Houses

People are always relocating, regardless of whether it is a buyer's or seller's market. Not the market, but rather life changes are the main reason people relocate. While some may be able to schedule their relocation, others enter the housing market due to life circumstances that force them to relocate regardless of seasonality or market conditions.

You and your way of life will determine whether you decide to purchase or sell a property. Is this a suitable moment for YOU to purchase or sell a property because of a shift in your life? The first step in purchasing or selling a property is to be clear about your motivations for moving and what it means to your family.

In this blog, we'll go through five reasons people why people sell their houses, along with a brief explanation for each circumstance.

Bankruptcy

A person or corporation may file for bankruptcy if they are unable to pay their debts or other commitments.

A petition is filed, either on behalf of the debtor (which happens more often) or on behalf of creditors (which happens less), to start the bankruptcy process. All of the debtor's assets have been measured and assessed, and some or all of the debt may be repaid with the help of the assets.

When bankruptcy procedures are successfully concluded, the debtor is released from all debt obligations accumulated up until that point.

Federal courts in the United States oversee every bankruptcy case. A bankruptcy judge decides whether a debtor is qualified to petition for bankruptcy and whether they should have their debts dismissed in federal bankruptcy proceedings.

An officer designated by the Department of Justice's United States Trustee Program to administer bankruptcy cases on behalf of the estate of the debtor is known as a trustee.

Damaged Property

Closing on a real estate transaction is a drawn-out procedure between the buyer and seller that involves documentation, walk-throughs, and other professional engagement to advance the sale. It is crucial to understand who is in charge of making repairs or making sure the home receives the right care if there is physical damage to the property before the closing.

Before the last step of the real estate transaction is completed, defects and faults are frequently discovered that block the sale. In many situations, the buyer has the option to halt the transaction and stop moving forward, but he or she should do a last walkthrough to make sure that no more harm is there.

He or she may work with the seller to repair or replace specific goods that were damaged after the first inspection but prior to the final closure of the sale during this stage of the transaction. But things might get tricky if the buyer is unaware of damage to the property that occurs before the closing.

Distressed Property

A home that is about to go into foreclosure or that the bank already owns is considered a distressed property. Because they provide the chance to purchase a property at a reduced price, prospective homebuyers frequently search for deals in seller's markets. Even while buying distressed houses carries a considerable level of risk, they still prove to be a good investment if done right. 

A distressed sale is often done for one of three reasons:

Foreclosure 

This is the most common cause of distressed sale where the homeowner consistently misses their monthly mortgage payments. The house is taken back into possession by the bank or the lender will take possession of the property through a deed in lieu of foreclosure. 

In the event of a foreclosure, lenders are frequently eager to sell these houses as soon as possible in order to comply with state rules. Normally, they will hold an auction or a foreclosure sale to sell the house.

REO Properties

Real estate owned, or REO, properties are those that do not sell at the original auction. These houses are regarded as distressed real estate.

In general, lenders don't want to be in charge of maintaining or fixing these properties, therefore they can be open to selling them for less. So you might be able to find a decent price by buying REO property if you know where to search.

Short Sale

Finally, homeowners who are in danger of losing their homes to foreclosure could be open to completing a short sale. Typically, this occurs when a homeowner is "underwater" on their property. In other words, they have a larger mortgage debt than their house is now worth.

When a buyer buys a foreclosed property for less than the existing owner owes on the mortgage, the transaction is known as a short sale. Short sales occasionally result in a favorable price for house purchasers, and it helps the present owner to escape foreclosure.

Probate

A probate sale may take place if a homeowner passes away with large debts. If the estate does not have sufficient cash assets to meet creditors' claims, property they possess will be sold to the degree practicable. If there is any money left over, it will either be given to beneficiaries or family members, depending on whether the person wrote a will.

Homes in probate are advertised and sold in the same manner as regular homes, usually with the help of real estate agents who list and show the homes to prospective purchasers. Anyone is welcome to submit an offer on these residences, however the procedure can be somewhat more difficult.

State-by-state variations exist in the probate procedure, but generally speaking, the court will appoint an estate representative, known as a "executor" in the case of a will or a "administrator" in the absence of one. This person is in charge of administering the estate and assisting with the probate process. Finding the deceased's reputable creditors is a step in this procedure.

If the estate needs to be liquidated to pay creditors, the executor will then be responsible for selling the property. To determine a listing price, the court will normally require an appraisal.

When there is at least one bid, the executor must ask the court for authorization to sell the house. The beneficiaries of the estate and the heirs of the deceased will be informed, and if no one lodges an objection, the sale will proceed with court approval.

If more than one offer is received, all potential bidders must normally appear in court to present their bids. The highest bidder shall be declared the winner and shall deliver to the executor or administrator of the estate a cashier's check for at least 10% of the offer price.

Rental

Simply put, there aren't enough rental properties. In fact, individuals who are unable to purchase a new house have switched to renting. Renting has always been a long-term investment, but keeping rentals now can boost your return on investment because prices are only going to rise further over the next few years.

After paying off your loan and the capital gains tax, selling your rental property now could seem like a major success, but you'd still need to figure out what to do with the money. I can completely understand if you actually have an urgent need for things like medical problems, but if all you're doing is attempting to cash in on what you believe to be the market's top, then proceed with caution.

Once you have a large sum of cash, you must find a way to invest it so that it can yield interest. It would be a sad reality if you sold your home only to later regret not taking advantage of the increase in value that has been occurring in real estate prices.

Experts say real estate prices will rise by another 7.4% this year of 2022, but if demand outpaces supply, this expansion may last for years. If you are still considering selling your rental, make sure to carefully assess how your life would be without it. Otherwise, you risk missing out on the present market's high pricing.

Sources:

https://www.investopedia.com/terms/b/bankruptcy.asp

https://www.hg.org/legal-articles/home-damaged-before-closing-who-is-liable-47935

https://www.rocketmortgage.com/learn/distressed-property

https://www.thebalance.com/how-does-a-probate-sale-work-4772241

https://www.forbes.com/sites/forbesbusinesscouncil/2022/03/16/rental-property-is-now-the-right-time-to-sell/?sh=67fe367346c7

https://www.piperpartners.com/blog/selling-home/the-ten-reasons-people-buy-and-sell-homes/