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Sell A Distressed Property

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If you own a property that’s in distress, you may feel overwhelmed and pressured to sell. But don’t worry – we can help you understand the situation and explore your options.

In this article, we’ll cover what is a distressed property, your options for selling it, and how we can help you sell your home in as little as 10 days – without the fees!

If you’re short on time, watch our video on selling a distressed property.

Table of Contents

How Can a Property Become in a Distressed Sale Situation?

Property owners may find themselves in a state of “distress” for many reasons. Financial burdens, unexpected expenses, or a decrease in income can all cause property owners to feel overwhelmed. These issues can be difficult to manage, but help is available.

Repossession

If a home or other type of property loan falls into arrears, the mortgage lender has the legal right to repossess. The amount of the mortgage debt will determine how quickly serious legal action can be taken against the homeowner.

To avoid repossession, some homeowners choose to sell their property quickly to a distressed property buyer.

Secured Loan Covenant Breaches

Covenants within the finance contract set out the parameters that must not be breached.

The finance contract includes covenants that must be respected.

For instance, in a loan agreement, the property may need to be leased in a certain manner (e.g. to retail tenants). If the property’s value falls below an established limit, the lender has the right to recall the loan.

Commercial property loans typically contain stricter provisions. Rather than surrendering the property to the lender, it is often more practical to sell the asset to commercial buyers like Property Saviour. 

Rising Interest Rates

When a mortgage term ends, the lender’s Standard Variable Rate (SVR) may become unaffordable. To avoid a SVR mortgage, borrowers can take action by remortgaging to a better rate. This can help them save money in the long run.

Rather than hold on to the property, sellers become motivated to dispose within a shorter timeframe.

When this happens, the lender’s SVR usually becomes the default rate of interest. This means that the homeowner’s mortgage payments could potentially increase substantially, making it difficult to manage the payments and keep the mortgage current.

To help make a more manageable situation, the lender may offer a range of options. These could include an interest-only period, a switch to a fixed rate, or even a re-mortgage. The homeowner can also explore refinancing with another lender, but this may be difficult due to the lack of equity.

Credit Cards and Other Unsecured Loans

Falling behind on other loans that are not secured against property can cause complications that lead to mortgage payments being missed.

This can include:

  • Personal loans
  • Car leases
  • And credit cards.

To prevent a County Court Judgment (CCJ), selling the property to a distressed buyer may be the best solution.

How do you deal with distressed properties
When someone finds themselves out of work, they may fall behind on their mortgage payments and get into debt. This can cause a property to be labelled as distressed.

Job Loss Or Redundancy

When someone finds themselves out of work, they may fall behind on their mortgage payments and get into debt. This can cause a property to be labelled as distressed.

Tax Changes

With a change in taxation rules, landlords get caught. For instance, residential landlords with high mortgage borrowings are feeling the strain due to Section 24 of the 2015 Finance Act. If the tax burden becomes unmanageable and the HMRC cannot offer any payment plans, property owners may turn to selling in order to settle their liabilities.

Divorce or Relationship Break-up

A lot will depend on how amicable the split is. If both parties demonstrate patience and agree to sell on the open market, the property sale does not have to be distressed.

However, in our experience, disagreements are bitter, and once solicitors are involved, it is already too late to sell privately.

Inherited Properties

If someone inherits a property they can no longer afford to keep, they may become a distressed seller.

Critical Illness or Injury

A change in personal circumstances necessitates a quick sale.

Critical Illness or Injury

A change in personal circumstances necessitates a quick sale. 

In a critical illness or injury situation, you may need to downsize to buy a bungalow or move into care. We are sympathetic in supporting you through this period.

How to sell distressed property
Repossession of your property should be a last resort, as lenders are bound by strict 'pre-action protocols' that require them to approach you to discuss potential solutions.

Can I avoid a distressed home sale? 

If you have a property in distress, you may be looking for a way to avoid a sale and keep your home. Here are some avenues you may want to explore when dealing with a distressed property sale:

Speak to your lender

Your first step should be to contact your lender. Keeping in regular contact will help you face the situation better than if you ignore it.

Most mortgage lenders will work with you to create a payment plan or modify your loan. If this is an option you can explore, make sure to get the modification in writing and keep up with your new financial obligations.

Repossession of your property should be a last resort, as lenders are bound by strict ‘pre-action protocols’ that require them to approach you to discuss potential solutions.

What does it mean for a house to be distressed
You may also consider borrowing money from family and friends to get back on your feet. Avoid credit card debt and payday loan companies.

Borrow the money

You may also consider borrowing money from family and friends to get back on your feet. Avoid credit card debt and payday loan companies.

Remortgaging

You may wish to check how much equity you have in your property. If you have more than 30% (70% loan to value) you may be able to remortgage the property to a better pay rate. This can be done with your current lender or a new one.

How to sell a distressed property
Selling through a property auction or a cash buyer are two popular routes.

How to sell a distressed property?

If you own a distressed property or are at risk of becoming a distressed seller, there are a couple of options you can explore. Selling through a property auction or a cash buyer are two popular routes. Both options have their pros and cons, so here is a closer look at them:

Property Auction: This method is widely used for distressed properties as investors are eager to buy them. Although selling a property via auction is legally binding once the hammer falls, there is a low risk of the sale falling through.

However, there is no guarantee that your property will sell, and there is a waiting period of up to three months.  You’ll have to pay upfront costs – legal fees, searches and entry fees.

Cash Buyer: Selling to a cash buyer is an ideal choice for distressed properties as the sale can be completed in a timeframe that suits you.

Most cash buyers can purchase your home within two weeks, though some can do it even quicker. You won’t receive full market value when selling to a cash buyer, but the speed of the sale makes up for it.

When looking for a cash buyer, make sure they have the cash by checking on Companies House to ensure they are not borrowing money – see screenshot below:

Look at Companies House to see their history of borrowing.
Most cash buyers can purchase your home within two weeks, though some can do it even quicker.

Where can you sell a distressed property?

If you’re looking for a fast, free, and hassle-free sale, consider selling to us. We specialise in buying distressed houses in any location and in any condition.

We are a genuine cash buyer and can buy your home as soon as you’re ready, whether that’s in 10 days or 6 months.

We’ll cover all the legal fees associated with selling your home, taking the stress out of the process.

If you’re ready to sell your distressed property, get in touch today and fill out one of our free no-obligation callback form to receive your CASH offer. We could have the money in your bank in as little as 10 days.

auction hammer

Property Saviour Price Promise

  • The price we’ll offer is the price that you will receive with no hidden deductions.
  • Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
  • These valuations or surveys result in delays and price reductions later on.
  • We are cash buyers.  There are no surveys.
  • We always provide proof of funds with every formal offer issued.
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We'll Pay £1,500 Towards Your Legal Fees

  • No long exclusivity agreement to sign because we are the buyers.
  • You are welcome to use your own solicitor. 
  • If you don’t have one, we can ask our solicitors for recommendations.
  • We share our solicitor’s details and issue a Memorandum of Sale. 
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Sell With Certainty & Speed

  • Our approach is transparent and ethical, which is why sellers trust us.
  • 100% Discretion guaranteed. 
  • If you have another buyer, you can put us in a contracts race to see who completes first.
  • Complete in 10 days or at a timescale that works for you.  You are in control.

Sell with certainty & speed

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