Selling with a Realtor

The first option most people consider when selling a home is to enlist the help of a real estate agent, or a Realtor®. I’ll use the term “agent” to refer to all real estate agents, but most agents these days are Realtors®, meaning they are members of the National Association of Realtors®.  Membership in the NAR is a good thing, and means your agent has been well-trained and maintains certain standards of ethics. Using an agent may be a good choice for you, but because you have must sell quickly, there are some pre-requisites to a successful sale with an agent.

Is There Time?
 First, you must have TIME before the Sheriff’s sale to complete the transaction.  A conventional home sale takes a minimum of 2-3 weeks for inspections, appraisals, title work, insurance policies, payoff orders etc. to be processed, and if your house is scheduled to sell next Tuesday, you might not be able to stop it.  Your lender MAY postpone the sale if you can prove to them you have a signed contract and a closing date scheduled with a title company, but you must communicate with your lender or they might sell it right out from under you. Your agent may be able to help you here; if the lender sees a legitimate contract in the works, they will likely work with you.  Remember, they don’t want the foreclosure to go through; they would rather be paid off.

Can You Afford To Sell?
Second, you must have enough EQUITY in the home to go to closing without having to bring money with you.  Yes, that’s right…bring money to closing even though you are selling your house.  Specifically, you must be sure that the proceeds of the sale will cover.
1. Payoff the note to the lender(s), which is probably more than you think it is when you include back payments, interest, legal fees, and penalties,
2. Pay any Realtor commissions, typically 6% of the sale price but more in some areas,
3. Pay title insurance, escrow fees, and any additional closing costs.

Pick a Good, Experienced Agent!
If you think you qualify based on the above, contact a reputable agent and immediately explain your situation.  Ask them to keep your situation confidential, but it is important to let them in on it. You do not want any surprises, and neither does your agent.  By fully disclosing your situation, your agent can do their best to help you sell the house, while also making sure all your obligations are taken care of.
An agent’s commission is a minimum of 6%, but you can try to negotiate. I would not recommend doing this unless the commission is such that it will prevent you from making the sale.  If the agent you have contacted won’t negotiate, ask them if they know any other agents who might be willing to. Many times they will know of a younger, or more aggressive agent that will be willing to help you out.
 There are definitely advantages to using a good, reputable agent — namely they are going to work hard for that commission.  They will put signs in your yard, pay for ads in the paper, and list your home with the MLS, or Multiple Listing Service.  Then they will pre-qualify buyers and show your home - all at their cost. If you have the time and enough equity in your home, this is a good option to try first.  In most cases, if house doesn’t sell, you don’t owe the agent a penny.

The Catch
But there is one BIG catch to working with an agent when you’re approaching foreclosure or are on any other time deadline to sell your house - they are going to want an exclusive contract for a fixed period of time.  You don’t want to be in a situation where the agent can’t get your house sold, but you can’t sell it to an investor to save it from foreclosure either, due to the exclusive contract.  Therefore, be very honest with the Realtor, and tell them “you’ve got until xx/xx/xx date to sell this house, otherwise I reserve the right to terminate our contract.”  This is very important! There have been cases where an agent had a house under contract, the homeowner subsequently sold it themselves to a private individual, and the agent then sued for their commissions.  You can avoid this by proper negotiation up front.