Proactively selling your home before legal action will almost always give you a better price for your property as well as save on other expenses and adverse credit records that are incurred during the lengthy and stressful legal process.
“There are many steps a distressed home owner can take, including a long term payment arrangement (six to 12 months extension), or a short term restructure of payments if they are falling behind in their bond payments,” says Calvin Ndlovu, head of operations at FNB Home Loans. “However, if repaying your home loan is just not possible, customers need to seriously consider getting their bank’s help to sell their property on the open market, rather than going through the legal process.”
All banks offer a solution to distressed customers to sell their properties on the open market. FNB’s own tool, QuickSell, was introduced in 2009 to help customers to sell their properties on the open market and realize better value, before going down the legal route.
“What most customers don’t realize is that the bank is not interested in owning property, we would far rather help customers realize the best value for their property than to go down the route of attaching a property and forced selling through a sheriff’s auction,” says Ndlovu.
The benefits outlined below, far outweigh going through the entire legal process and selling the house on a sheriff’s auction.
Established tools and systems are in place to help customers
Most banks have solid systems and tools in place to help customers through the selling process. It is in the bank and the customer’s best interest to realize the best possible price for their home as this will help to cover any potential shortfall and leave the consumer in a good position to re-establish themselves financially.
Possible discounts and free services
Other advantages include possible discounts and free services. FNB offers discounts of up to 25% of the current outstanding home loan balance when there is shortfall after the sale of the property and any remaining shortfall after going through the QuickSell process will be repayable over 10 years, interest free.
“We contract established, well-known estate agents that invest the necessary time, energy and money in marketing the homes on all their channels,” says Ndlovu. “We also give the customer a free valuation and an indication what price to expect, so that the customer has certainty on the process going forwards”.
Contact your bank to find out what they offer their customers in terms of help through the process.
Houses are sold quicker with a better selling price reached
“On average, over the last year, homes that are in the QuickSell programme have spent around two months on the market and realized in excess of 85% of their value prices, which is a far better results for customers that are in distress as they are able to fairly quickly go through the selling process and get good value,” says Ndlovu
Houses sold on auction average don’t fare as well as those sold on the open market and go through a very lengthy, time consuming process before they are finally sold on auction.
Customers are in a better position after the sale
While selling your home due to financial pressure is very emotional and stressful, home owners in distress don’t always consider the other implications such as having to go through the legal process and end up paying high legal fees.
“Once a home has been attached and sold on a sheriff’s auction, the customer not only has the potential short-fall that they will be expected to continue paying for the next 30 years, but also an adverse judgement on their credit record,” says Ndlovu.
Having an adverse credit record will mean that will applying for any additional credit will be difficult, and this will also weigh against them when trying to rent another place.
“Most rentals will require a credit check, and it now becomes very difficult for a consumer, who has gone through the judgement process, to rent a place to live,” warns Ndlovu.
The best course of action is to seek the bank’s help before legal action is taken.
“Getting into financial difficulty and the process of going into arrears and the legal action that follows is highly stressful and customers sometimes try to avoid this completely, by not engaging with the bank. However, the best possible outcome for the customer and the bank in these situations is to make use of the solutions and tools that banks have in place to realize the best possible price for your property,” concludes Ndlovu.