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10 Tips to Prevent Foreclosure in Charlotte, North Carolina

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One of the most intense things that can happen to an individual in their lifetime is to lose their home to foreclosure. It’s a huge burden that follows a person for years, even though it takes only about a year to get to the point of no return. To prevent foreclosure in Charlotte, NC, you first have to educate yourself on what your options are.

Understand the impact

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Foreclosure has a devastating impact on your credit. North Carolina homeowners who get caught in foreclosure proceedings won’t be able to secure another mortgage, or potentially get things like a car loan or a new line of credit.

A foreclosure follows on your credit for seven years. This can cause financial difficulties if you try to work with a local company or a national company to buy goods or get a loan. Any homeowner in the Tarheel State who has potential foreclosures in the future needs to be aware of the long-term impact of foreclosure in NC.

What’s important to realize here is that, in North Carolina, the missed payments leading up to the foreclosure have the biggest impact on credit scores. The foreclosure itself won’t have as big of an effect on the ability to get loans in the future – it’s all of those missed payments.

The foreclosure process in North Carolina

When there are enough missed payments on a home loan, the house goes into default. That’s the point when a mortgage company can initiate foreclosures on a property.

Mortgages are loans that are secured with real property – a home for most people in Charlotte, North Carolina. If that homeowner doesn’t make their payments on time and in good faith, the lender can repossess the property and sell it at auction under North Carolina foreclosure law.

At auction, the Charlotte home is sold to the highest bidder. That bidder then takes possession of the home immediately, and the person or people living there have to vacate through the eviction process.

That’s a wide overview of what foreclosure in North Carolina looks like, and for most folks, that’s enough for you to know. However, if you don’t have the resources to pay for the cost of the mortgage payments, you’ll want to know how you can avoid foreclosure.

North Carolina legal requirements of lender

Under the North Carolina General Statutes, which are the laws that govern the state, a lender can’t start the foreclosure process until a homeowner is behind roughly four months – 120 days – on their payments.

Once you miss a payment in the Old North State, you’re immediately thrown into pre foreclosure in North Carolina. this doesn’t materially mean anything. It just indicates that you’re struggling to make payments and are in danger of heading into foreclosure.

During this time, North Carolina law permits the lender to charge late fees for those missed payments. They’ll generally send a breach letter to give you information about how to avoid foreclosure.

Keep in mind that no company wants to foreclose on those loans. If a borrower fails to make their mortgage payments, then there are no benefits for the mortgage lender. They are saddled with the cost of reselling the home and potentially having to make repairs if it doesn’t sell at auction.

Direct contact from the lender

Federal law requires a mortgage holder to at least attempt to contact you by phone as well as in writing. They have to reach out to you to let you know where you stand and also to let you know what options you have to catch up a mortgage in Charlotte, NC.

Consumers are offered some protection under North Carolina law and federal law.

Understand your promissory note and deed of trust

Mortgage paperwork

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There is so much paperwork that goes into a mortgage, and much of it stuff that Charlotte homeowners don’t even read initially. All of the legal terminologies can be frustrating and overwhelming.

One of the first things that you should do if you are in danger of foreclosure is to go and look at your promissory note and your deed of trust. These are the legal, binding documents that will lay out exactly what has to happen before your house can sell at a foreclosure auction.

You have protections under North Carolina law and under federal law. Consider enlisting legal services to help you understand what is in these documents to offer you those protections. These services are often free through home advocate organizations in North Carolina.

You have contractual rights to protection in America. Don’t ever think that a large mortgage company has a single special privilege over you.

How long does it take to foreclose on a house in North Carolina?

With foreclosures in North Carolina, the lender must contact you by phone no more than thirty-six days after you’ve missed that first payment. They must then contact or attempt to contact you again after each missed payment following that first one.

No more than forty-five days after your first missed payment, the lender is legally obligated to contact you via a notice from their department of loss mitigation to give you options. You’ll also get an individual mortgage counselor assigned to you to help you prevent foreclosure.

Under Governor Roy Cooper in North Carolina, mortgage companies have to contact you via multiple modalities to help you get back on track.

The foreclosure hearing

The vast majority of foreclosures on residential homes in Charlotte and across North Carolina are nonjudicial. Though there are judicial foreclosures in North Carolina, they are the exception, not the rule.

Though the process is called nonjudicial foreclosure, there is generally one court appearance that owners are sometimes required to make. This is the actual foreclosure hearing itself. It’s the final step in the process.

A lender must let the homeowner know about this by serving them with a “notice of hearing”, which comes by certified mail ten to twenty days prior to the date of the hearing. This notice can also be served in person or by being posted on the door of the home.

The foreclosure hearing is the point of no return in the foreclosure process. After this most programs can no longer assist owners to prevent foreclosure.

How can I stop foreclosure in NC?

Prior to the foreclosure proceedings, there are many ways to stop the process from going forward and to prevent losing the house, being evicted, or falling into homelessness.

1 – Get current on the home loan after the first missed payment

This one might be obvious, but it’s the best way to prevent foreclosure. That’s partly because fees will accumulate on the loan with each missed payment. Those fees will make it harder to afford to catch up.

This might mean taking a hustle job with a local LLC, reaching out to nonprofits for financial support to catch up on other bills and free up cash, or working with programs on financial literacy.

Bills can feel relentless for families. Sometimes it’s like trying to fill a bucket with a hole in it. There are programs across America, not just in North Carolina, that can help you to catch up on your mortgage or figure out ways to do so. (Hint – there are some ways to do so further on this list!)

2 – Redeem the property

This is a last-minute hail mary to save families from homelessness due to foreclosure in Charlotte.

Redeeming a property is when the homeowner is able to pay off the total amount of the foreclosure before the sale of the property. North Carolina law gives Charlotte homeowners facing foreclosure a ten-day window after the auction to pay off the loan.

3 – Work with an investor on an upset bid

Even if you can’t redeem the loan prior to that ten-day window, there might be another chance to save the loan from foreclosure. An “upset bid” is when someone comes in on that ten-day window and offers a higher bid on the house.

It requires a hefty amount of funding, but that ten-day window resets every time there’s an upset bid on the property. This can go on and on, dragging a Charlotte foreclosure out for weeks after the foreclosure auction.

In Charlotte, North Carolina, an upset bidding war is most likely to happen between two investors who want to buy the property because of location or some other benefits they see. However, a homeowner can agree to sell to a real estate investor, then rent out the home after. This requires a contract and is tricky, but it can allow families to stay in their homes despite the foreclosure.

4 – Apply for loss mitigation

Lenders are mandated by the federal government to offer loss mitigation after one or two missed mortgage payments. Those facing financial difficulties should absolutely look into assistance like this when trying to pay down missed payments.

Foreclosure prevention is important in America. Services to help homeowners with foreclosure prevention through loss mitigation can provide assistance in Charlotte and across North Carolina.

These programs provide foreclosure prevention assistance for free. No one should ever pay to keep their home out of foreclosure in NC, not to anyone except the lender. Depending on the situation you’re in, there are options to make a payment arrangement with or without the help of outside agencies.

Always remember that mortgage services do not want to have to sell the house. They would much rather collect the debt and keep homeowners in their homes. This saves them cash and prevents additional costs.

5 – Apply for a deed in lieu

Home in danger of foreclosure in Charlotte, NC

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It’s a hard thing to think about for struggling families in Charlotte, but it could be better to give the house over to the mortgage company rather than to let the clock run out and have the lender take possession through foreclosure.

A deed in lieu is when the homeowner and their spouse agree to give the property over to the bank, rather than allowing the home to foreclose. It’s worth it to reach out to agencies for free advice before making the decision to go this route. There could be a North Carolina program that will provide benefits to prevent this outcome.

With a deed in lieu, the bank takes possession of the single-family home in Mecklenburg County before the back payments throw the mortgage into foreclosure. Homeowners don’t keep the home in this case, but for many homeowners, it’s a better option.

Once the house is turned over to the bank, homeowners can get a fresh start in a different home in Charlotte, NC without taking the credit hit.

6 – Apply for a forbearance

A forbearance is when the mortgage company agrees to fold the past due payments into the loan at the end, effectively catching up on missed payments on the Mecklenburg county home. This is one of those services that people don’t think of enough when they miss payments.

There is a limited amount of time that forbearance can apply to on any given loan on a single-family home or any kind of home in North Carolina. However, families in Charlotte can catch up on every missed payment this way and start from scratch.

If a family is getting assistance through government programs like NC Health Check or free and reduced lunch for families with kids, that can qualify them for forbearance through foreclosure prevention programs in North Carolina.

A forbearance often has strict income requirements in NC. Individuals must sign an attestation that they have a hardship with their income that is preventing them from making a payment. Programs like Medicaid and food stamps almost automatically fill the requirement for forbearance related to hardship.

7- Obtain a loan modification

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As early as possible after a missed payment or even in advance if you know that you’ll be missing a payment, get on the phone with the mortgage company.

You want to ask for a loan modification. This is the best way to allow you to keep your home while fulfilling your legal requirements to the lender.

A loan modification might lower the amount you pay for a while. This will give you a chance to look at programs related to assistance, talk with investors, or find a new business if you’ve lost your income in Charlotte.

This kind of assistance is free in NC, and Charlotte homeowners have a wealth of resources to work within a loan modification program.

8 – Look at government programs

There is so much assistance out there for families facing financial difficulties in Charlotte, NC. Particularly after the onset of the COVID 19 pandemic, the government created benefits and more than one program to help homeowners access assistance.

The American Rescue Plan provided multiple entrees into services for families during the coronavirus pandemic. These services covered everything from hardship forbearances to deferments. Mortgage payments worked with legal experts to create things that worked within the American Rescue Plan.

If your income meets the requirements, you’ll be able to get assistance in the wake of COVID 19. Though many of those COVID 19 relief programs are no longer available, they are a great example of how government programs can help provide resources through agencies.

The infrastructure for many of the services are still in place, allowing homeowners to access some of the program support that agencies started providing during the coronavirus pandemic. These are always free, and each program has its own ways to access debt relief.

9 – Work with a housing counselor

NC is home to a great network of housing counselor services. In Charlotte, homeowners can visit offices in cities across Mecklenburg County to get sliding scale services. Often, these are free for Charlotte residents.

If you are struggling with medical bills, you’ll be able to access a program that can help you find agencies to help keep your single family home. When you can’t afford the cash to save your house or feed your family, it’s important to the city of Charlotte to help you avoid homelessness.

Support programs, new ones, and old ones are a great way to figure out how to save cash and maximize your income. It’s possible to work with these agencies free of cost in Charlotte.

Foreclosure prevention is important for the community in NC, not just for homeowners and mortgage companies in Charlotte. That’s why foreclosure prevention services with a housing counselor are often free of charge in NC.

10 – Pursue a short sale

A strategic way to avoid foreclosure and get it all over fast is to pursue a short sale.

In this method of foreclosure prevention in NC, a homeowner works with an investor to sell the home for much less than the balance of the debt. This must be done in conjunction with the lender, who will agree to take less cash than is due on the home.

In this instance, the homeowner does not get to stay in the house. However, they are able to prevent a major hit on their credit or the credit of their spouse if they are a comaker on the loan.

A short sale is a completely legal process. An investor might have a related LLC or they might be an individual working as a real estate investor on the side. In any case, an experienced investor in Charlotte, NC will know exactly what the legal requirements are for a short sale. They’ll also be able to walk you through any related bumps that you might encounter along the way.

Other options for foreclosure prevention

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Not mentioned in our list of tips is anything to do with Chapter 13 or Chapter 7 bankruptcy. Both of those options automatically put a stay on foreclosure proceedings, however, they have a completely different set of legal and financial ramifications.

If you are in the military or are a combat veteran, you might have other free resources at your disposal. North Carolina is home to many retired and active-duty military servicemembers.

Foreclosure relief for military personnel is available under the federal Servicemembers Civil Relief Act. If you are on active duty or have been on active duty within the last year, no mortgage company can foreclose on your home during that time. This gives you a great deal of grace to figure out your financial situation if you’re struggling in North Carolina.

Don’t give up in the face of foreclosure!

Hands down, the simplest way to deal with foreclosure in North Carolina is to ignore the problem. Eventually, this is one that will go away. However, it will go away when your home is in the hands of a lender.

Not only will you have to find another place to live, but you’ll also have a massive hit on your credit that will prevent your financial autonomy in the future.

Taking action to prevent foreclosure can make all the difference. Look at all the options, and safeguard your future against foreclosure!

How To Sell Your House During A Divorce – Ultimate Guide

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Divorce is a tough time for everyone involved. Dealing with the sale of a home is only part of the equation, as there are a lot of things going on for both parties. Understanding how to sell a piece of real estate during divorce, both the process and the options, will help you make smart decisions that get the whole thing over with faster. Learning how to sell a property during divorce will make it all easier.

Divorcing couples are often hard pressed to be in the same room together, much less to come to an agreement on how to proceed with the sale of their house. Because the home is the largest asset most people own, it can feel like the stakes are even higher than in a traditional home sale.

Decision factors in divorce

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There are three main drivers of decisions about selling a home during a divorce.

  • Financial reasons
  • Legal reasons
  • Personal reasons

Most people focus on the personal facet of the divorce process, in part because the emotions are so high with the other spouse. Partnering with the other party, someone who you’d promised to love, honor, and cherish as you built a life together, meant sharing everything.

It makes the most sense to look at the process through the lenses of legal reasons and financial reasons. Deciding to sell the house shouldn’t be based on personal reasons. Divorcees need to look at it through the lens of smart decision making.

The family home is emotional

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The family home is a place of memories and is often the emotional heart of a couple. Letting it go is naturally difficult. Oftentimes, the family house is the most tangible reminder of a couple’s life together.

Community property in the form of the marital home is a tough issue. People’s feelings get involved and that makes it tough to think about the house during a divorce. The marital home is a place where you built a family together, with or without children.

Letting go of the marital home is not all bad, though. It can be a positive emotional step forward to break with the other spouse is an important step in the healing process.

Liability factors

Holding on to a house during a divorce can be tempting, but there are powerful reasons to separate property or consider selling real estate.

There are liability reasons, especially when it comes to tax time and thinking about the financial upkeep of the real estate.  Talk to a tax professional about how to leverage other assets and how to best negotiate sale proceeds when selling a home you used to co own.

Selling may be the best option given all of the financial, legal, and personal factors. Liability reasons could really push that decision making process.

The most valuable asset

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The marital home is likely the most valuable asset the couple has together. It can also have a strong sentimental value.

That sentimentality might lead the couple to decide that one spouse should keep the home, even though the other wants to sell it.  Things can become complicated when both want to keep the home and neither is willing to negotiate.

Deciding how to split the house is tough. If both want to live in the home, they have to work out an agreement that is functional for everyone.  For example, one spouse could stay in the house until the final sale date, while the other moves out.  This way, neither retains custody of the property, but they also aren’t making things more difficult by involving attorneys and the court system.

When two formerly loving people can find a civilized way to have a relationship during this difficult time, it makes it much easier than using a divorce attorney for everything.

Real world divorce scenarios

There are three common scenarios that play out for a divorced couple and splitting the home.

  • One spouse buys out the legal interest of the other, keeping the marital home.
  • The couple agrees to a home sale and divides any equity between the two parties.
  • One spouse continues to occupy the home for a certain agreed upon period, then the house is sold.

All of these scenarios can be part of the divorce trial. A real estate professional can help work out the issues, including other legal interest issues.

What is a “Buyout?”

A buyout is a situation where the divorcing couple decides that one spouse will “buy out” the interest of the other in the home. This way, both spouses get what they want out of the divorce petition.

The mortgage or financial upkeep of the home falls onto the spouse who decides to stay in the home in this scenario. The buying spouse will have to pay fair market value for the home in a divorce selling scenario. Community property interest is easily solved in a buyout.

Real estate appraisers can help determine what the home interest should be sold for. After that, a written and signed agreement between the spouses will seal the deal. Whatever the buying spouse contributed to the home sale price is part of the divorce settlement.

Custodial parents

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In situations where there are children, one general is the custodial parent while the other has visitation. Typically, the custodial parent will buy out the noncustodial parent to keep the children in the family home.

This scenario is ideal if couples have kids and want to provide stability. It also works out well if the market conditions aren’t quite conducive to sell quickly.

Buyouts don’t usually happen all at once. The details will usually be in a settlement agreement or part of the divorce settlement. A buyout does almost always involve refinancing the property under one person’s name. Working with a mortgage lender can help, as can working with a real estate agent.

Refinancing for divorce

In most cases, one spouse will apply to get the home refinanced under their name only.

For example, let’s look at a home that currently has a mortgage loan with a principal balance of $200,000 and an equal amount of equity in the house, $200,000. The buying spouse would need a loan of at least $300,000. This includes one-third, or $100,000, to payout the equity that the other spouse has in the house, as well as $200,000 to pay off the previous loan.

When you sell your house during divorce proceedings, it proceeds like any other home sale.  One spouse signs the deed to transfer ownership of the home to the other spouse. Then an escrow company takes care of most of the paperwork and transfers the funds.

Consider the needs of your children before you sell

When children are involved, things get much more complicated.

It’s important to factor in the children’s needs before making any final conclusions on what to do with the home. The stressful situation of divorce takes a toll on the kids even more than the toll that it takes on the parents. Kids should be included in the process. Parents need to ask their kids about what they want out of the situation.

Often, kids try to leverage their own emotional reasons through the divorce process. It’s still important to listen to what they have to say about selling the home. Divorce affects the future value of the home, but it also affects the kids.

Get on the same page

It’s essential to get everyone in sync regarding the home’s sale, if at all possible. Get a written agreement between the two parties. It should lay out a plan about how the profits from the sale will be split.

Couples who are unfamiliar or uncomfortable doing this alone should work with an attorney to negotiate the house during a divorce. The attorney client relationship is privileged, so they won’t have a stake in what happens to the house during a divorce.

Though family law can help, no one wants to end up in divorce court. The home sale process is governed by family law in a divorce, but if you get on the same page, you can get around that. A law firm can help without going to divorce court.

If you choose to sell the house and your spouse is not in agreement, hire a mediator or lawyer.

Be prepared for court

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Not all couples are able to come to an agreement. If this happens, it’s a difficult road when the parties can’t make a decision whether to sell the home, keep the house, or even what real estate agents to use. Paying for a divorce attorney and preparing for court will likely be the next action.

The earlier couples get an agreement on how to sell the home during a divorce, the better. This will allow them to avoid costly legal fees down the line. It will also make the selling process much more easily accessible. Each party won’t have conflicting interests about whether they should keep, rent out to others, or sell their share of the home.

If no one takes steps early on to come to an agreement, everyone could end up subject to a court order.

Prepare your home for sale

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During divorce, there is a specified period in which you are selling a home. You’ll get more money if you sell the house with a real estate agent, but selling the house will go faster if you go with a cash home buyer. Get a pre-inspection of the real estate before putting it up for sale

If selling is the goal, it’s important to inspect the home to determine if there are any red flags for potential buyers. A pre-inspection by a qualified contractor can help determine if there are any problems with the property before putting it up for sale or listing with an agent. They’ll be able to tell you about any problems they see.

Repairs and updates

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When following the agent’s advice, it’s best practice to make repairs and updates to anything that may need it.

You’ll start with a thorough cleaning, decluttering, and staging the home with furniture. This makes prospective buyers appealing on paper and in person. If any structural issues or repairs need addressing, get them resolved so you’re not spending money on maintaining them while also being liable for any future damages.

In the listing, the agent will include a list of updates that have been made recently, such as new paint or carpets. After updating the home and making repairs, write out a list of all recent renovations for potential buyers. This will make the house more appealing to buyers by helping them know that this is a home they can move into and enjoy.

Keep a conscious timeline

If you are worried about selling your house due to emotional and mental strain, take all the time you need.

Try to keep in mind that, though this is hard, it’s also what’s best for everyone. Your youngest child might not even remember all of this chaos. Parents can move forward knowing that they have done their best during one of the most challenging periods in your life.

If you decide to sell it on the market, know that the property’s closing date is unpredictable and could be 30 days, 90 days, or more. A house is not going to get sold immediately. The buyout process isn’t a fast one.

Don’t forget about capital gains tax

One factor to consider is the capital gains tax from the sale of the property. Couples who are married and selling a home, can exclude up to $500,000 in profit. That only works before the divorce is finalized. After the divorce is final, it’s twice as much for selling a home.

To qualify for this exclusion, someone must have lived in the property for two of the last five years. It cannot be an investment property.

There’s a significant financial incentive to sell the house before the divorce is final. Reducing the real estate taxes and capital gains tax is worthwhile. If a spouse has enough income to make it work, selling the house during divorce through buyout can be the simplest way forward. 

How to sell your house during a divorce

When it comes down to crunch time, without much time to make repairs or put money into the property, selling the house quickly is essential.

The fastest way to sell a house as-is is to sell to a local investor. Investors are looking for fast home purchases, and they can get closing finished up quickly.

Investors don’t typically care about the condition of a piece of real estate. They often buy homes that are in need of significant repairs or have been abandoned. Even with that, before an investor looks at the house, it’s a good idea to move personal items out of the way and declutter. This gives them access to things like appliances and plumbing, as well as electrical and utilities.

A local investor will never charge any money upfront. The only time money should change hands is at the closing table.

Professional homebuyers are similar to investors, but these companies work with a whole team. They include lawyers, real estate agents, brokers, and contractors. Essentially, a professional investor is a turnkey operation for selling homes.

These companies have a lot of the same advantages as working with an investor during a divorce. For example, they offer an all-cash purchase, quick closing, and no fees.

Divorce experts

When you are ready to sell a home during divorce, you can work with a divorce expert.

These experts work one on one with couples who are trying to get out from under their home during a divorce. They walk the couple through the sales process to create a seamless home selling experience. The entire transaction is done in conjunction with family law practices.

Divorcing couples don’t even need to communicate directly with each other. If things are contentious, it’s possible to file separately with a divorce expert to do all of the paperwork.

There’s no need to work with a real estate agent to sell a house during a divorce. Mortgage payments will continue and property taxes will keep accruing during a long sale process. Going around a traditional real estate agent process to get it done fast.

Working with a divorce expert starts with submitting some information online. They then contact you with questions about the details of your home. These questions don’t cover things like spousal support or a joint tax return. However, couples can get a tax break if they get their home sold quickly.

Questions usually cover things like the condition of the house and the details of the timeline. Prior liens against the house are a priority, as are utility company charge offs. Anything directly related to the home is of interest.

Once the details are all there, the divorce expert will do a walk through of the property and make an offer.

Selling your house while divorcing

One of the most stressful things about divorce is trying to decide what to do with the home.

Anyone going through a divorce will know that selling the house is one of the first decisions and also one of the hardest decisions. Working with a divorce expert and trying to untangle the emotional realities versus the financial needs can really help.

How To Sell Your House As-Is When It Needs Repairs

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When you want to sell your house as is, it can be daunting. That’s especially true if there are major repairs to be done. A fixer upper might seem like a hard sell, but not if you know how to sell a house in need of repairs.

There are lots of different aspects to this situation. It’s important to understand all of your options and to determine exactly what you can and cannot afford. You also want to know what the process is.

Often, people have much more leverage than they think they do when selling a home as is.

Reasons to sell a home as is

There are lots of reasons to sell a home as is. It could be that your bank account doesn’t have enough to cover the cost of home repair projects or it’s an inherited home. Maybe the home layout doesn’t work for you anymore or there are safety issues with the home.

A major reason people choose to sell a home in need of repairs is that they’ve found their dream home. They might have started off inbargain hunter mode, but now they can afford a higher price for a home that fits their needs.

No matter the reason, an old house can attract more buyers than you might think.

Condition of the loan

There’s the issue of the condition of the home, but there’s also the issue of the condition of the home loan.

Homes with FHA loans can be put on the market, even if they need extensive repairs. In fact, you can sell your home with or without a real estate agent. Buyers are interested in someone who is selling as is, whether the home is in foreclosure or has a current mortgage.

The entire transaction includes the cost of the current loan, the home inspection, any net profit, closing costs, and potentially even certain repairs. Most homeowners don’t have to get the house ready for sale if they are willing to take less money for the home.

A house that needs repairs can attract potential buyers even if the loan is in as rough condition as the home itself.

Options for selling a house that needs work

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There are two options for homeowners who want to sell a house that needs repairs.

Whether you don’t have the time or money to make these repairs, you have the option to sell “as-is.” You can approach this sale in two different ways:

  1. Sell without doing anything.
    If you sell your home without doing anything, the resale value will be less, but so will the cost of necessary repairs. Homeowners can still get a fair price, and the entire process takes less time. In many cases, given that it’s a seller’s market, there’s not even a need to involve a home inspector.
  2. Make a few specific major repairs.
    Sometimes there are just a few things that stick out in a house. Things like tattered shingles or lackluster hardwood flooring are easy to spot. The biggest repairs can make the biggest impact. It can be a good idea to make sure those major things are taken care of.

There are pros and cons for home sellers with either option.

On one hand, if you leave it alone, you’ll be done faster and able to move on to other things. You won’t have to wait around for all the repairs to get done. You also won’t have to spend the extra money to get the repair work completed if you sell your home as-is.

On the other hand, the second option can dramatically improve the asking price. That’s true no matter what the housing market looks like. Making a few key repairs can greatly improve the sales price of a home.

Ways to sell as-is

Just as there are two options for how to deal with the home itself, there are two options for selling a house that needs work.

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  1. Listing with a real estate agent
    When listing with a real estate agent, the first key is to connect with real estate agents who have experience with selling property that isn’t appealing to traditional buyers. If your home goes beyond the need for minor repairs, the buyer pool will be considerably different than most buyers are in.
    Agents who specialize in selling a house in this condition have worked on fixer-upper properties before. This is not the moment to work with a green agent who hasn’t been around the block before.
    They know how to navigate major repairs, as well as which cosmetic repairs will be the best course of action. Curb appeal may or may not be the driving force in this kind of sale.
    Keep in mind that closing costs and commissions tend to me more with real estate agents. If you do decide to go this route, be sure to use an agent that is part of a national association.
  2. Selling to a cash buyer
    If a home is sold to a deal hunter, a cash buyer, then the home sale will be less time-consuming. A buyer who is looking to purchase homes in need of extensive repairs will be more excited about your home than a new house.
    Professional investors don’t follow the traditional sale route. They often don’t need to use a bank or work with a down payment because they have cash in hand. Even a house that needs repairs can get a solid asking price with a cash buyer.
    It’s possible to get multiple offers from cash buyers to sell a house in this condition. A real estate investor is the right way to go for lots of people selling a house.

As-is home listings

As is home getting repairs

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When you explore the option of selling a house without making repairs, that means looking for prospective buyers. Unfortunately, you can’t just assume that someone will come along and offer you a top price when selling a house.

Real estate investors sometimes do come out of the woodwork and contact sellers. That’s usually because a home is in foreclosure and a public notice has been posted as such. Real estate listings are a place where deal hunters go to find houses for sale.

Working with real estate agents

Be sure to find an agent who has experience selling properties not up to typical market standards. Your listing will be marked as an “as-is” sale meaning that you will not be spending time making any repairs this will attract a different type of buyer (usually someone looking for a good deal).

However, your agent should still be able to set clear expectations to buyers that no major repairs will be made. Keep in mind that the buyer may still request a home inspection, and you will likely have to settle for less than the listed sale price.

A real estate agent will likely want to see things like a fresh coat of paint, even on a house that needs repairs. For them, a home’s appeal will be an integral part of the outside look of the place.

Working with real estate investors

Laptop on a counter in a home for sale

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If you want to go the way of selling to a local investor or cash buyer, you’ve got different options to sell your house.

This popular option involves selling directly to the buyer. This could be a house flipper, investor, or professional home buying company. All three of those options are viable solutions if you want to sell a house.

This method cuts out all middlemen and reduces almost all fees. Investors aren’t concerned about having you do repairs yourself or getting inspections done before purchasing. If you can find a local reputable investor, this will likely be the best option.

Investors come in all shapes and sizes. Some investors are part of a larger real estate group, while others work independently. Depending on their previous experience and on their ability to fund the project, investors target a wide range of houses.

You’ll find a lot of investors online, which is the go-to place for people who want to sell a house to look. A simple google search will point you towards a huge array of prospective home buyers. Selling as is when you have the rich resources of the internet is less challenging than it used to be, pre-internet.

Making a profit

Home investory looking at a computer

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One thing is common with all investors – they are there to make a profit. Selling as is to a home investor can mean giving up your commitment to a higher sale price. Why? The investor is there to make a profit.

A house that needs work will require money to get that work done. Not only money, but it will involve time and risk. When the investor pays less than market value for the home, that’s the mechanism that allows them to take the house off of your hands.

Most investors aren’t making a killing at this. Though they may buy your house as it is, they’re also on the hook for potentially extensive repairs. House flippers have to put considerable time and resources into a project to clear a profit.

For many investors, working with home buyers is a joy. They do make money off of the deal, but they also see that they can support someone who can’t make traditional sales work. Selling as-is is the best solution for lots of families in crisis or financial limbo.

A cash buyer often feels that they are doing good in the world by taking these homes off the hands of homeowners in need. They often try to make enough money to keep going, but they also recognize that they have to be competitive. It’s a seller’s market, so the sellers really do have the upper hand.

Though not every home investor is this altruistic, know that for the most part investors are out to do right by sellers. Selling a house is intimidating and can be very hard on a family. An investor can take some of that pressure off, even if they are also making some money themselves.

Selling a house for slightly less money means less time and headache for the seller. It’s a trade-off, but one that can work.

Make home improvements

Home repair worker

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Going the route of making repairs yourself may end up saving you more money in the long run.

If you want to increase the home’s value before listing it, take the time to make a prioritized list of the repairs that need to be made. Then, make repairs and updates in order of that priority.

Some major issues that are worth fixing are egregious mold, water leaks, missing roof shingles, and foundation damage. These can all be hugely expensive, but they are also huge red flags for any traditional buyer.

These kinds of major issues turn someone off before they even get a chance to fall in love with the home. Making the hard decisions about expensive repairs is one of the most stressful parts of selling a house, no matter its condition.

Things like electrical work or replacing wood flooring can make a huge difference in the price, but they can also make a huge dent in the budget. Not only that, but they can be time-consuming too.

Every little repair, no matter how small, adds up. Even small things like painting or replacing the living room carpet will affect how much money you can get for the house. Home repairs, when done smartly, are a good idea. To an extent.

Not all repairs are worth it

Before you invest any time or money into your home, be sure that the work that’s being done is adding value to your home.

For example, if your property needs a new roof and it will cost 7,000 dollars but will add 8,500 dollars to the property’s value, it’s worth doing. Working with a local investor or experienced agent can help make sure your money is going into projects that will make you a return on your investment.

Do your own homework in this situation. Look through all of the possibilities and make sure that you’re not putting money into a home needlessly.

Get the counsel of a home agent or an investor if you’re unsure about the repairs that would be best for a home prior to putting it on the market. Most of the time, however, a homeowner can figure out which repairs are necessary through good research and critical thinking.

Home repairs & improvements worth doing

Home being sold as is

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Though not all improvements are worth your time and money, some can really help improve the value of your home before sale. These are the kinds of issues that are deal breakers for a lot of potential buyers.

Here is a list of the top home improvements that are a good idea to make before selling.

  • Updating the electrical panel
  • Replacing the roof
  • Repairing pipes, septic system, or sewer connection
  • Updating the HVAC system
  • Addressing termite, water damage, or mold
  • Installing a new water heater
  • Installing a new furnace
  • Renovating outdated bathrooms and kitchens
  • Exterior including landscaping
  • Refinishing hardwood floors
  • New carpets or getting them professionally cleaned.
  • A new coat of paint

The last one, a new coat of paint, is one of the cheapest and easiest ways to update the look of a home.

Smaller repairs and getting some of that extraneous work done can make a massive difference in your home. However, major repairs have a direct impact on the price you’ll get.

Always do this before putting the house on the market

cleaning a home for sale

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Not included in the list above is this one must-do for anyone who’s putting their house on the market as-is. Even if there are other serious issues with the property that you’re willing to take a loss on and leave unrepaired, there’s one thing you have to do.

Clean and declutter the home.

Houses tend to get full of things and accumulate a lot of dirt and grime while we’re living in them. It is absolutely worth the effort and cost to clear out as many personal belongings as possible. Clearing the space will show that you’re not hiding anything. It will also give potential buyers a chance to envision them in the space.

The other thing to do is to hire a home cleaning service, or even to do the home cleaning yourself. This means shampooing the carpets, washing the walls, and scrubbing all of the surfaces.

A clean home is an indication that it’s been well maintained. Even if there are standing repair issues, when the house is clean, it presents well. It gives the impression that the house is one that a buyer can trust is going to be in good condition.

The outside of the home

As far as the outside of the home, having minimal landscaping done can be a big boost. It’s generally not worthwhile to put a lot of money into adding new plants, but clearing out old debris and brush is almost always worth it.

If it’s the summer, make sure your lawn is mowed and your shrubs and trees are all trimmed. This will make the house look nice. Weed garden beds or have them mowed down completely.

Something as simple as power washing the siding or the garage door makes a dramatic difference. This doesn’t have to be a major undertaking, but it will make a major difference.

Home improvements not worth doing

Roof repair on home for sale

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Not all improvements are created equal. Before jumping and doing a whole bunch of repairs, take a moment to think through what you’re doing.

The following changes are likely not worth your time. They most definitely are not worth your money. Keep in mind – the goal here is to make improvements that will give you the best return on your investment.

  • Partial room upgrades
  • Grandfathered-in building code issues
  • Old appliances
  • Minor electrical issues
  • Driveway or walkway cracks
  • Repainting trendy color
  • Fixing minor cosmetic damage
  • Renovating beyond your neighborhood’s norm

Small issues that a new buyer can easily fix are not worth doing. Just as you see these as small things to do, so too will a potential buyer see these as small things.

If you get caught up in doing little things, they’ll quickly bleed your budget dry. You won’t be able to make that money back, and it all ends up frustrating you.

Style vs substance

Many repairs and updates are often stylistic choices and not substantive repairs. Old, out of style appliances or paint colors don’t affect the home’s value that dramatically.

There’s a huge difference between a roof leak and 80’s tile flooring. Though home improvement shows will often show these incredible updates that improve the price of the home, those are flipping situations and not traditional home sales.

Yes, style does matter. However, unless you’re ready to work with a designer to make evergreen changes to your home before you sell, it’s likely better to sell it as-is. In fact, you’re more likely to turn someone off instead of turning them on.

Taste is a matter of taste, and it’s incredibly personal. Don’t assume that the right buyer wants an open floor plan or a bold paint color. Allow buyers to come in and choose what they want in the home.

When we talk about selling a home as is, what we really mean is selling it without making major repairs. An HVAC system that’s not working or a foundation that’s uneven is a major issue. Antiquated built-ins are not.

How to find and screen a local investor

There are several ways to find a local investor. It’s a good idea to come at this from a few angles.

Reach out to some local agents for recommendations. That’s always a good first move. You can also call the number on any “we buy houses” yard signs you see on the street. The easiest way is to google “home investor near me” or “cash home buyers near me.” You can also try searching with your city’s name – “we buy houses in Michigan” or “we buy houses in Charlotte, NC.”

After finding a few local investors, you will want to do a bit of research on the company. It’s always a smart decision to check and see if they are certified by the Better Business Bureau. Look for reviews from past clients.

No matter who you end up going with, you want to vet all of them. Make sure they are a legit company before starting the process. One red flag to look out for is if they don’t disclose personal information such as photos of the owners, names of employees, business addresses, etc.

Don’t be afraid to ask them questions about their past clients and more information about their company and the owners. If someone is stonewalling or refusing to answer your questions, move on.

Work With A Professional Home Buyer

If you feel overwhelmed and unsure about what the next step is, just reach out to someone! The average person may buy and sell a home only a couple of times in their entire life.

A professional home buyer will buy and sell houses all the time. Just like anything, practice makes perfect. Companies who buy and sell property every single day understand the process inside and out. These companies have helped dozens of homeowners sell fixer-upper homes and “hoarder” houses.

Reach out to someone, like Connect Home Buyers, for a free consultation. There’s no obligation to do anything with this, and there’s never any pressure. Even if you are going through foreclosure, have bad tenants, or just inherited a property, there is help for you.

Simplify The Home Selling Process

When you are ready to sell your home as is, you want to get an honest, fair market price for your property. Not only that, but you also want to walk away without having to do any work.

If you want to leave your home totally as is – no repairs, no cleaning (leave whatever you want), no realtors, no lawyers, no appraisers, no open houses, no waits, no commissions, no fees, it’s possible.

The traditional sale route is great for lots of home sellers, but it might not be great for you. That’s ok. You want to be at peace with where you are AND to get the right price for your home. Selling a house that needs repairs shouldn’t be a huge burden. In fact, it should take some of the burdens off of you.

Life happens to all of us. Let an experienced professional home buyer help you navigate the process!

How To Sell A Rental Property – Ultimate Guide Plus Tax Tips

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There are a huge number of benefits to owning a rental property, but sometimes it’s the best decision to let it go. Even when there are great tenants and the property is making money. Even if neither of these is the case, you can still learn how to sell a rental property.

Is it time to sell your rental property?

rental home for sale

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Many people buy rental properties with the idea of making money from them, but then they end up in a situation that’s not ideal. Rental property owners can get a lot out of selling to real estate investors and letting go of the rental income.

The real estate market is always going up. Though an investment property might have been a great choice initially, rental income doesn’t always keep up with the market. Most real estate investors eventually choose to sell rental property eventually.

A new owner can deal with the hassle of figuring out cash flow and dealing with renters not paying rent. Reverting back to a personal residence model often makes the most financial sense. Even if there’s passive income from the rental property, that doesn’t make it the perfect option for everyone. 

Renter concerns

With a rental home, there’s a lease period with the renter. Rental property owners don’t have to wait for the lease expire period to arrive before selling a rental home.

The current lease agreement doesn’t mean it’s impossible to sell a rental. The new owner will benefit from the case flow. When someone is ready to sell a rental, they can work with the new owner to transfer the lease on the rental home.

Selling a rental with a tenant

high rise rental properties

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A tenant-occupied property is still able to collect rent through the sale period. This is true even if they are on a month-to-month lease. A good tenant is hard to find! Potential buyers are willing to work with an existing tenant.

The security deposit could be part of the sales agreement. It’s a good idea to get real estate advice about things like the security deposit and the tax rate.

One property that’s always attractive to potential investors is one with a security deposit and a good tenant. Passive income from this kind of setup is always a welcome asset. 

Rental property and taxes

Avoiding taxes when selling a rental property is a central concern. The sale proceeds from a home sale can mean a big tax hit. To avoid capital gains taxes, it’s important for property investors to make smart decisions.

Real estate investing is sometimes like the stock market. In the case of capital gains taxes, the tax rate is the same. It involves financial planning to defer taxes and ensure that you’re not in the top tax bracket. 

Capital gains taxes are the difference in the original purchase price and the current fair market value. That profit is taxable income. No one wants to owe capital gains tax. The tax rules are the same for everyone, but by selling to a cash buyer for a lower cost, landlords can get a lower tax bill. They’ll save on closing costs, too.

To avoid capital gains tax, talk to a tax professional about your options. A tax professional can tell you whether the purchase price of your inherited rental property will be low enough to avoid a higher tax bracket.

Finding a buyer

When it’s time to sell your rental, there are lots of decisions to make.

The first decision is whether to sell the property as a FSBO (for sale by owner), doing the legwork on your own. Even with a FSBO, you’ll need a real estate attorney to sell a rental. It can be expensive and it can waste a lot of time to do it alone. All of that eats into cash flow and causes a lot of headaches.

Real estate agents

Real estate agents are another option. Working with a real estate agent always means paying higher closing costs and fees along the way. Again, this takes a bite out of the cash flow and can reduce the profit from real estate assets.

For a smooth rental property sale, consider a local investor or professional home buying company. For landlords who have never sold anything before, it’s probably best to let an experienced professional handle it the process. Their expertise in pricing and negotiating can make it all easier.

Remember, the priority is to get the property sold. You also want to pay less in property taxes along the way. A real estate investor can help facilitate all of that. Seller financing is also an option in many cases.   

Current tenants

rental home

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Landlords who have tenants in the rental currently are a great prospect for a real estate investor. Investment property is always a hot choice on the real estate market, more than a primary residence.

To sell a rental property, have available a history of the rental income.  Current tenants who are good tenants will make it easier to sell a rental property.

If the current tenants are less than ideal, ie not paying rent, breaking the lease rules, destroying the property, etc., then it might be best to try to get them out of the house before attempting to sell the rental property.

Getting property ready to sell

rental property ready to sell

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If you want to get the highest price for a rental, the first thing is always the condition of the property. Make sure there aren’t any major issues with the house that could lower the price. For example, get the carpets cleaned professionally and make sure there aren’t any broken appliances or stains on the ceiling or walls.

It’s never a bad idea to work with a professional landscaper, painter, or even a general contractor in the lead up to selling a home of any kind. A house in great condition will make seller financing more of an opportunity.

Anyone who’s been a landlord for any amount of time will be familiar with these kinds of resources. The same kinds of things that need to be done with a home after an old tenant leaves and before a new tenant goes into the property can be done before the house goes up for sale.

Do you need to end the lease?

In many cases, ending the lease of a tenant is a sure fire way to make the selling process go much faster and easier.

Unfortunately, this can sometimes end up in a long eviction battle that drains cash flow and eats up resources. Landlords who don’t want to go through evicting tenants will have an easier time working with local investors than just about any other kind of seller. A  home can be sold as is, tenant included, if it’s to a real estate investor.

If you don’t want to deal with evicting your tenants and want to sell it as-is without doing anything to it, work with a local investor to see if they can help take it off your hands for a fair price.

Seller financing with a real estate investor can make it even easier. This way, there’s not waiting around for bank financing and the whole process can go a whole lot faster.

Taxes on sellers

Rental house with back taxes

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Anyone who is selling a rental property will definitely want to become familiar with taxes and how they apply to the seller of a rental property. The tax implications of selling a rental property are significant. .

The first order of business is assessing what type of profit – if any – you might make on the sale of a rental property. If the owner sells it at an unrealized loss, then there are no taxes to be paid. That’s great! There won’t be any out-of-pocket expenses or income from the transaction. In this situation, you won’t have to pay tax at all on the rental property.

Most real estate transactions involve some kind of profit. That means there must be some gain involved, meaning these transactions are subject to capital gains tax fo some kind. The most common taxes paid on rental property sales are capital gains.

What is capital gains tax?

When someone sells a property of any kind for more than it is worth, they have a capital gain. The capital is the money and the gain is the increase in money.

There are two different types of capital gains. These are short-term and long-term. They depend on how much time has elapsed since the date that the house was purchased. Each one is treated uniquely at tax time by the IRS.

Short term and long term gains

calculating capital gains taxes

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When an owner sells an investment property after owning it for less than one year, the gains are taxed as ordinary income. This is the same way that people are taxed for wages and salaries in the United States. Short-term capital gains are subject to a tax of 10% all the way up to 37%.

Pretty much all other investment properties held for at least a year get a lower rate. This is because they’re subject to long-term capital gains tax rates. Profits on flipped houses are more like to be taxed as short-term gains at the higher rate.

Someone who owns a property for at least a year is subject to a long-term gain tax. These profits are taxed at a lower rate that ranges from 0%, 15%, to 20%. The specific rate depends on your income and filing status.

Calculating capital gains

Calculating the capital gains or loss starts with finding the “cost basis” of the property. From there, it’s time to the “net proceeds” you made from the sale of the investment property.

The cost basis is the amount paid for the property. This includes including some closing costs, as well as appraisal fees and legal fees. It also included the cost of any major improvements made to the property.

Net proceeds

Next, find net proceeds. Subtract the costs from the sale price of the home. You could look at this example to understand more clearly. Say you sold your rental for $200,000. You paid $15,000 in commissions , then another $5,000 in other costs (fees, etc.). The net proceeds on the property are $180,000.

Once we know the cost basis and the net proceeds, then there’s a formula to find out the capital gains. It’s just the net proceeds minus the cost basis. It’s that simple!

Before finding out how to defer capital gains taxes, first you’ve got to know how much you owe.

Reduce or avoid capital gain taxes

Capital gains can take a big hit on the profits from an investment property. Unlike a primary residence, investments are there for the purpose of making the owner money. There are a few ways you can help reduce or avoid these taxes.

Use a 1031 exchange or Starker

capital gains tax calculator

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A highly popular way to do this is to reinvest the profit in another property or rental within 180 days of the sale. This way, you’ll clear the profit from a rental property without paying any taxes. It’s a section of the tax code called 1031, Starker.

This is a great way to avoid hefty capital gains taxes on a property that is not your primary residence. To do this, sell one investment property, buy another one that’s of the same kind, and use an intermediary to facilitate the process.

The code gives you 45 days to identify up to three like-kind exchange properties. Once the transaction qualifies, there are 180 days to close on a new property from the close date of your rental property.

Taxes are highly complicated. What’s more, the laws are always changing. This is a major reason why you should consult with a certified public accountant before making any final decisions about what to do with a rental property to avoid taxes.

Offseting gains with losses

There’s another tried and true way to reduce your tax liability. When you sell an investment property, you can pair the gains from the sale with the losses of your other investments. This strategy is called called “tax-loss harvesting.”

Capital gains examples

rental income taxes

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Here’s an example. If you sell your rental property for a profit but make no other gains from investment sources during the year, the IRS will take a chunk of the profits. However, it’s possible to use losses to reduce that amount.

Here’s an example. You decide to exit an underwater stock position and purchase a condo development instead. In the condo deal, you profit $25k. During the same tax year, you lose $20k on stocks. This leaves you only being liable for $5K of taxable capital gain.

It’s important to remember here that the IRS code requires that short-term and long-term losses get used first to offset gains of the same type. If your short-term losses exceed your short-term gains, you can apply the excess short-term losses to any long-term gains.

Simplify selling your rental

landlord rental sign

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Though the tax code is complicated, selling your rental property doesn’t have to be.

When you decide it’s time to sell your rental property, you can sell it as-is without doing any work or putting any time or money into it. Working with a professional home buyer is a great option. An investor can do the heavy lifting in the process and can get your rental off your hands.

Getting rid of the middlemen

condo rental apartments for sale

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When you sell directly to an investor, you cut out all the middlemen. All of those confusing, complicated steps that are involved in selling a rental property are out of the picture. Investors can make quick and swift decisions when buying property.

A real estate investor knows exactly what they’re looking for and how to find it. The selling process can be simple,  even on properties that have tenants. In the case that those tenants need to be evicted, the investor can do that for you.

An investor will know the area well, especially when it comes to rentals. They’ll be upfront with how much they can offer for the property. There’s no back and forth of negotiation. There are no tactics and no extended timelines. As a result, investors can close quickly. They often have cash on hand, which means they don’t need to wait for financing.

Partnering with an investor

If you need an honest, fair market price for a rental property, an investor can make that happen without much work. No repairs, no cleaning, no realtors, no lawyers, no appraisers, no open houses, no waits, no commissions, no fees.

With an investor, it’s just the seller and the buyer. The tenants are taken care of through the transaction, and everyone can get what they need out of the home sale. Investors have generally been working wit landlords to buy and sell real estate for years. They provide you with a quick, all-cash transaction and help you simplify the entire process. 

All investors know that time is money. Getting the transaction done quickly and without hassle is what it’s all about.

Selling Your House During Foreclosure

The hardest part about foreclosure is that it makes homeowners feel like they’ve failed in a tremendous way. They aren’t able to keep up the payments that they promised to make to the mortgage holder, and now they’re faced with hard decisions that are often overwhelming. Learning how to sell your house during foreclosure can help you feel better about what’s going on, saving you not only money but also preserving your peace of mind.

An essential piece of this is learning about the foreclosure process and how it affects your ability to keep your house. At the very least, knowing the foreclosure process will give you a real world understanding about your timeline for home sale.

Each step builds on itself. It’s critically important that you know that you can sell your home all the way up until the end of the sheriff’s sale. There’s a lot between your first missed payment and that final point. All along the way, you have lots of options.

Sometimes, the best option is for you to let go of the home.

The emotional toll of foreclosure

emotional toll of foreclosure

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When you buy a home, it’s usually with the idea of being in it for years or even decades. People often land in what they think will be their “forever home”, only to find that life circumstance ends up forcing them to rethink their dreams. Facing foreclosure is one of the toughest things anyone can go through. 

By the time a homeowner has gotten to either the pre foreclosure stage or the foreclosure process begins, they’re generally exhausted and at the edge of their ability to cope. What’s important here is that homeowners take a moment to figure out what their options are, without emotion.

The phone calls and the tons of letters from the company might be easy to ignore for a while, but it’ll all become real serious real fast as time goes on. Though it can cause us to freeze up from the stress, judicial foreclosure will only get worse if you ignore it. 

Potential foreclosure relief

home in foreclosure

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Oftentimes, there are many more possibilities than people realize. Whether it’s loan modification, short sales, choosing to file bankruptcy, or even getting the full market value for a home through a cash deal, homeowners can try avoiding foreclosure.

Even though this step won’t totally erase the struggles they’ve had, it can make a huge difference for many homeowners.  Sometimes, looking after your emotional wellbeing is the most important thing.

The selling price of a home in foreclosure might not be as high as it would be if you worked with a real estate agent through a traditional sale, but it’s preferable to the alternative.

The short sale process, where the bank takes less money than what’s owed, is great if I want to sell my home and avoid a deficiency judgment. It’s much better to allow everyone to take a chunk of the loss than it is to take it all on yourself. To sell a home through a cash offer, even if it’s for less than what the bank has stated they need, is still much better than what the bank will get at auction.

What is pre-foreclosure?

Before formal foreclosure proceedings start, there’s a long run up to the final date that’s called pre-foreclosure. During this time, the homeowner still had possession of the home, and they still have the opportunity to get the loan back on track.

This is the point when it’s easiest to avoid foreclosure. There are lots of missed payments, and there will be a hit on the homeowner’s credit report, but there isn’t yet a final decision. Loan modification and negotiated terms are easiest to get through during the preforeclosure stage.

The importance of three missed payments

At the time of the original sale of the home, the homeowner signs a contract in which they agree to repay the amount borrowed through a mortgage loan. This is generally in the form of monthly payments, which can either stay the same throughout the life of the loan, or they can change in the case of balloon loans.

If, for any reason, the borrower doesn’t make those payments for three consecutive months, the lender starts the pre-foreclosure process. At this point, the loan is in default.

Default doesn’t sound overly ominous because it’s not. Default is really just a warning. Lenders want to get back what they’ve put into the house in the form of mortgage debt.

After three months of missed payments, the lender is now seriously concerned that the homeowner is not going to keep up their part of the agreement.

Catching up overdue mortgage payments

Key to a home

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Making mortgage payments isn’t the only way to catch up. The homeowner needs to start looking at other possibilities to pay off the loan. This could be in the form of a short sale, or working with a real estate agent.

Default is only the first step in the process, and homeowners have plenty of options to get their mortgage payments back going from this point. No mortgage company wants to go into foreclosure. This initial foray into the preforeclosure process is the lender’s way of getting the homeowner to come back around to paying their mortgage payments.

Whether a lender is using a law firm to go through judicial foreclosure, or if the state you live in uses the non-judicial foreclosure process, selling your home will stop the foreclosure process. The attorney client relationship means you can talk to your own law firm to get advice on timelines and options.

Options for homeowners in preforeclosure

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For people who are in a tough spot because of problems with tax returns, job loss, burdens from other lenders, medical bills, or any other serious financial situation, selling your home can be an option to stop home pre foreclosure. If you need to keep your home and have some financial improvements coming your way, then you can talk to the lender and avoid sale.

Whatever terms the lender agrees to, whether it’s a fair price or a loan modification, that can help you to get out of preforeclosure. If you can’t afford to keep your house though, it’s just time to sell it.

It’s much worse to go through the entire process in a state of denial than it is to find out you’ve crossed past the point of no return on your loan.

Talk to the lender

The faster you can get yourself together, the better. Many people are frozen and totally helpless at this point. That’s a dangerous place to be. When you reach out to your lender, you can work through all kinds of methods to keep your home. They can put a forbearance on the loan to give you more time. They can also use loan modification.

Typically lenders are forgiving and, if requested, can allow you more time to sell before losing your property to an auction or the bank.

Even after contacting your lender, you will want to take action quickly. If you cannot sell your home in time, you won’t only lose your home and thousands of dollars, but serious damage can be done to your credit.

What is a notice of default?

When someone is going through significant financial hardship, things can start to snowball and they can end up getting further and further behind. After three to six months of missed mortgage payments, the lender will send out a notice of default.

This is a significant step in the foreclosure process because it’s a matter of public record. While this letter goes out personally to the homeowner via certified mail, it also goes to the courthouse. This is the first real red flag in terms of financial health, and it will absolutely place a black mark on a person’s credit history.

Here, the homeowner has a good chance to negotiate lower payments, delay payments, or even restructure the home loan. 

The whole process from this point forward lasts somewhere between three months and a year. That’s from the issuing of the notice of default to the auction, which is the last step.  How long it takes depends on the state the home is in.

What is a notice of trustee’s sale?

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There are lots of words for the actual sale of a foreclosed house. Sometimes it’s called a sheriff’s auction, a trustee’s sale, or a foreclosure auction. All of these mean the same thing – the bank is officially selling the home to a third party.

A trustee’s sale is the end of the line, but it doesn’t happen immediately. Depending on the state a home is in, from the time foreclosure starts with the notice of default to the time they get a notice of sale could be as long as a year. If the homeowner comes up with enough money during that time, they can stop the home from being foreclosed on.

After the home loan goes into default, the lender will still give the homeowner time to catch up the loan.  Phone messages from the mortgage lender are consistent throughout this process. They’ll also send emails and continue to send letters. All of this is with an eye to avoid foreclosure and engage in loss mitigation. It’s much better for the lender to sell a home facing foreclosure than it is to foreclose on the property!

Last-minute foreclosure sale

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The whole idea of getting a basketball through the hoop in just before the buzzer or sliding under the door just before your hat is lost forever is exactly what some foreclosure deals feel like. If you’re in a dire situation, selling your home before it’s foreclosed can be a life saver.

A sherrif’s sale is a public event. Anyone can come to the table to buy a house with a foreclosure notice at the sale. If you are able to sell your home prior to that date through a short sale, you can stop all of this and avoid foreclosure. Though you might be in the middle of the foreclosure process, that doesn’t matter until it’s finished.

There is time all the way until the very last moment to avoid foreclosure. Most lenders will keep sending letters and calling to attempt to work out a repayment plan all the way until the date of the auction. This is important – the foreclosure isn’t final until the auction is complete.

Your property will be published in the local newspaper indicating that the property will be available at public auction. The owner’s name will be printed in the notice and newspaper, as well as its address, a brief description of the property, and when and where the sale will take place.

Auction

If you are unable to sell your home to pay off the mortgage loan prior to the auction date, then your home will go up for bidding. The lender will sell your home to the highest bidder.

The property address and the information about the property are first published in the local newspaper. Foreclosures generally avoid large papers like the Washington Post. This lets potential buyers know the pertinent information. Included here are the owner’s name, the address of the property, a short description, and the details of when and where the sale will occur.

At the public auction, the house is sold to the highest bidder.

What if no one buys the home at auction?

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It’s possible that the mortgage company won’t be able to sell your home at auction. The foreclosure process is similar to a traditional home sale in that someone still has to want to buy the house.

There are two common reasons that a home doesn’t sell during foreclosure.

First of all, there might be too many liens on the property that make it unattractive to buyers. This kind of financial information can be detrimental to potential buyers. The remaining balance of the other debts besides the mortgage can make it not worthwhile for a person to buy the home.

The other reason people might not go for a foreclosed home is lots of needed repairs. If it’s going to cost far too much to fix up the house, then potential buyers might not be able to justify that cost.

For whatever reason, if no one buys the home at auction, it then becomes the property of the bank. Bank-owned homes are the end of the line for houses that have a defaulted mortgage. The bank is still going to try to get their money back out of the house. In working to sell my house, the bank might have repairs done. the might also work to remove liens to make it more attractive to buyers.

One thing a bank is unlikely to do is to involve a real estate agent in selling your home. At least, they won’t do this in a meaningful way. They might enlist an experienced agent to come in and work on behalf of the lender to work on the home or to stage it.

Selling your home is not about going all in for the lender. The goal is to get it gone without paying closing costs. They just need to get it off their hands as quickly as possible.

Foreclosure eviction

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The eviction process for a foreclosed home is extremely similar to the eviction process for a rental property.

The homeowner can stay in the house until the foreclosure is complete. Once the property is sold, a homeowner will get an eviction notice that orders anyone who is on the property to leave immediately. This is served by the local sheriff.

The bank will give the homeowners a few days to get their things together and leave. Personal property left on the premises becomes property of the bank. These houses are sold as is, so the new owner will take possession of whatever is still there. Furniture, clothes, equipment, and any other kind of personal property is the responsibility of the new owner to handle.

If a homeowner refuses to leave the property after foreclosure, then law enforcement can remove them by force. Continuing to stay on the property is trespassing after the auction.

When you owe more than the house is worth

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In some instances, the house has depreciated and you owe more than the house is worth. Settling the mortgage through a short sale will keep your credit report clear. Maybe you had a high interest rate or took on a mortgage you couldn’t afford.

This is an instance where knowing how to sell your house during foreclosure can help you to avoid foreclosure altogether. This could save your credit report from a big hit and also allow you to sell your home.

In a short sale, you sell the home for less than the debt you owe. For this reason, a short sale might sound like a bad deal for the bank, but that’s not true. The prospect of going through a foreclosure is so distasteful to the bank that they’re willing to negotiate.

Though the mortgage holder might lose some money on the short sale, they’ll probably make more than if they sell the home themselves. A short sale offers them a chance to get more money with less hassle.

Banks hate to take possession of a house. A bank isn’t a real estate agent, and they aren’t interested in holding real property for long. Remember, a bank’s business is money and transactions. A mortgage is their end goal, not to have a piece of real estate.

A short sale will still save you from the huge hit your credit score takes if you let the bank take your home. If I want to sell my home when I owe more money than the mortgage, I need to take hold of the situation.

The trick with a short sale is that you have to find a buyer. The good news there is that there are lots of people who are willing to buy your home in preforeclosure, all the way up to that magic auction date. A short sale option is attractive to a buyer because they can then turn around and sell the home themselves. They won’t have the time crunch that you have when you’re facing foreclosure. 

Stopping foreclosure without selling

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The worst thing that people do is to hide from their mortgage lender. If you don’t make some effort,  a lender will naturally take legal action to get their money back. That’s understandable.

You need to reach out to your lender and ask them about ways to catch up your mortgage. Lenders will take legal action if a homeowner doesn’t try to work out a deal with them. The best option for homeowners is to reach out and ask for more time to catch up.

A lender might be willing to restructure the loan with a different interest rate. They could refinance the home. You could also restructure the loan to allow you to catch up on missed payments.

The final option would be to to file Chapter 13 bankruptcy. That is something you should talk to a law firm about, as it’s a major step. Chapter 13 is likely better for your credit score than foreclosing. Again, I might decide to sell my home before choosing bankruptcy.

A foreclosure specialist can help

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There are some real estate companies out there who specialized specifically in foreclosure. These companies work with people who are in danger of losing their homes and help them get a sale going.

This could be through a no obligation cash offer, or it could be as a more traditional real estate sale. The latter only works if the owner is able to catch the mortgage up in the meantime. That’s because the bank has to have some leeway before a home goes into default.

A foreclosure specialist will offer quick, experienced real estate options for avoiding foreclosure. They can help owners to wade through the neverending paperwork to get out from under the mortgage.  It’s good to have someone on your side during a tough loss like the one you face when you’re not able to cover your mortgage.

Though you’re probably new to this as a homeowner, this is their profession. A foreclosure company is above board, and they will spend time working to get a deal that works for you. Remember, you’ve still got your home as leverage. That’s an asset that people are willing to pay for. Leverage that asset!

Avoiding the worst case scenario

What you need to decide is what your worst case scenario looks like. You might be overwhelmed at the start of this process, but the more you learn, the more empowered you’ll feel.

Look for a company that offers a free consultation and will give you lots of options. Often, the worst case scenario is not nearly as horrible as you think it is.

Selling A House With Back Taxes – A Full Guide

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There are lot of reasons that someone gets behind on their home taxes, and they very rarely have to do with some deep and terrible problem. Often times it’s due to an inherited home that comes with back taxes or a life change like a divorce. Whatever the reason, it’s possible to sell a house with back taxes to get out from under the burden.

A clear home title

In order to sell a house, the title on the property has to be totally clear of any liens. This includes liens from creditors like mortgage companies and also government liens. 

When someone owes money to the IRS, it’s possible that the federal government will set a lien against their house for the money owed. This is because a house is a piece of real property that the government can count on to get their money back. This process is fairly automated, so you can expect it to happen if you owe taxes. 

Many homeowners are surprised to find out that the money they owe to the IRS has been applied to their house. It’s a nasty surprise to find this out when you get to closing on your home! 

The lien is not able to be assessed until the IRS files something called a Notice of Federal Tax Lien with the Secretary of State in your state or with the register of deeds in the county where you live. This is how people are notified of the lien, and it’s how a title search is able to find out about the tax lien.  

The government is relentless

When the IRS assesses a tax liability against you, they can put a lien on anything that you own. That applies to your house, but also to any property in your name. Cars, boats, some kinds of businesses – anything. The federal government is going to get what it’s owed, one way or another. This kind of debt is unlike any other sort of debt that you might owe.

It’s not just the IRS. Property taxes that are owed to any government agency are the first on the list of debts that must be paid. A lien against your home from any government agency is similar to a federal tax lien. In all cases, this kind of debt must be taken care of before any other action can be taken on the house. 

Options for selling with a tax lien

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Though the lien has to be taken care of, that doesn’t mean it has to be paid directly before you can sell your house. You can make headway by taking care of your taxes in all sorts of ways, not just by paying them in full before you list your house. 

All of these options involve negotiating with the tax authorities to sell your house. Homeowners who owe back taxes have to make provisions for the money that they owe in order to sell. You either have to pay it upfront or negotiate to pay it on the other side. 

Option 1 – Close with enough cash

The first and easiest option to sell your house with a tax lien is to get to closing with enough cash to pay off all the debts. If your selling price is high enough, you can pay off all of the liens owed on your house. 

Working with a real estate agent, you can factor in your taxes owed into the closing costs. You can also get a fair cash offer for you house and so settle the debt that way. Getting the tax bill paid at closing is a perfect way to settle your tax bill. Sale proceeds are used to pay the taxing authority.

Don’t forget that you’ll have to pay realtors fees as well. Assuming you can get market value for your house, you might not have enough equity to pay the mortgage balance and the back taxes. You can only sell your property if you can work with the government body to settle the back taxes.

Sometimes, homeowners will sell their house for a high enough price to pay off all of the liens on it and also to put money in their pocket. That’s obviously not what happens for everyone, but it’s certainly a best case scenario. 

Option 2 – Chapter 13 bankruptcy

If there is not enough money in the sale to cover the cost of the tax liens that are on the property, then the only option is to pay the taxes to the IRS before.  One way to do this is to file for Chapter 13 bankruptcy.

Through this process, you’ll be able to structure your debt so that you can pay it off. When you do this option, you might even be able to negotiate with the IRS to pay less than what you owe. An Offer in Compromise is a huge benefit if you owe back taxes. 

With this kind of restructuring, you can get a payment plan that will make it all work for you. An IRS lien is not going to go anywhere, but you can still get it all done in a timely manner. The sales proceeds from all of your assets can be folded in to balance the debt you owe. This can cover state taxes as well as taxes from any other government body. Your property is a fantastic way to settle the debts you owe.

Chapter 13 is emotionally difficult to engage in. It can feel like a massive failure to move forward with this decision, but it’s much better than the alternative. Chapter 13 restarts the clock on everything from credit card debt to mortgage payments to taxes. It’s a clean slate to rebuild from. 

Option 3 – IRS Subordination

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This option is really part of option 1. With this process, the IRS agrees to put the money they are owed behind other creditors. They are able to make what you owe to them subordinate to what you owe to other creditors, namely the mortgage company.

Why would the IRS subordinate a tax lien? The reasoning is simple – they want to get paid. By putting their lien behind other debts, the house can sell and they can get their money. Even the federal government wants to avoid a tax sale if you owe back taxes. Make no mistake though – property tax liens only go away when you pay them. Even if you subordinate the debt, you still have taxes owed.

Option 4 – Work with an investor

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Real estate is a booming business, and investors are always looking for homes to buy for cash. Working with a cash investor can be one way to get out from under a tax lien. 

Investors can resolve the debt in the process. After all, they can see that there is a tax lien through a title search. It’s not as though the money you owe is a secret. 

A cash investor can pay off the tax lien as part of the closing process. These buyers are often less afraid of deals that involve tax liens or home repairs than traditional home buyers. They’ll work with you to buy your house with back taxes. 

Getting a buyer to pay off the lien on a home is especially possible in a seller’s market. A cash buyer will sometimes pay the IRS or the municipal government upfront in order to facilitate the sale of the house. In a hot real estate market, this is even more possible. In return, there’s a credit on the home to cover the cost of the upfront lien.

Understand the possibilities

The takeaway for homeowners who owe back taxes here should be that it’s possible to sell a house with a tax lien. When you owe delinquent property taxes, whether it’s from unpaid income taxes or from tax debt that is associated with some other source, it’s a huge problem. A federal tax lien or a property tax lien can be part of the foreclosure process or it can be a legal claim from local governments. Whatever the reason, if you’re saying “I’m ready to sell my house”, then know that it’s possible!

Though you may want to sell your house fast, getting out from under your property isn’t likely to be as easy when you owe back taxes. If you have enough equity to cover the taxes, it’s much easier. You can work with a cash buyer or a real estate agent to get the options that are right for you. Don’t be afraid to check with a title company yourself before you get surprised.

This process might take a little more creativity and it might not be as easy as a traditional sale. It’s still a real option. Don’t feel overwhelmed by the process. Look over what’s possible and make a decision about the right way to take care of your tax lien.

How To Sell an Inherited Property – Ultimate Guide

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Inheriting a property from a loved one is both a blessing and a challenge. It’s obviously a blessing to have someone you care about care enough to leave you with something as substantial as a piece of property. However, navigating the situation can be like walking a tightrope of emotion and financial stresses. Figuring out how to sell an inherited property can be daunting, but getting it sold can also be a huge relief.

What to do with an inherited home?

Depending on what your needs are, you may want to move into it yourself, offer it to a member of the family, rent it out as a landlord, or sell it.  

A common decision that beneficiaries make is to move into the property themselves and sell the home that they’ve been living in. This can be a great decision if there is an emotional attachment to the house, or if the location works given career conditions and social needs. Using the home as a primary residence is one of a few options that can defray the taxable gain on the home.

People do choose to rent the house that they have inherited in some cases. This way, they can preserve other assets and pay down outstanding debts with the rental income.  A property management company can help defer the responsibilities and make this process easier.

The third option is to sell inherited property. There are a few ways to do this and still get fair market value for the property. Selling an inherited home involves paying capital gains taxes and estate tax. However, the proceeds from the home sale can give a buffer when loved ones have to pay capital gains tax.

Personal belongings and property

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Many families choose to hold an estate sale to clear the house of unneeded items after the original owner’s death. This part of the inheritance process can be emotionally draining, but it’s an essential one.

This is a great point in the process to enlist the help of friends and extended family. As with all aspects of the grieving process, it’s important that loved ones don’t stretch themselves too thin and try to do everything on their own. Leaning on support structures will make it all easier for you.

Sometimes family and friends aren’t available to help out with an estate sale, particularly if there is a geographic distance issue. In this case, it’s a good idea to hire a local estate sale company to handle the sale. These are available most everywhere. They’ll take either an upfront fee or a percentage of the profit from the sale.

Estate sale logistics

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What’s great about working with an outside company is that you don’t have to worry about anything. They’ll sell the personal property inside the home as designated by the family, coordinating advertising and logistics. Once the sale is over, they’ll clear out any remaining property in conjunction with the plan you put together.

An estate sale can generate some extra money for paying of capital gains tax or inheritance tax, particularly if there’s a lot of personal property that no one in the family wants to keep.

Once the sale is done, the house is ready to put on the market. A pre listing inspection on a home that’s for sale will allow a real estate agent to take on the property more quickly. Depending on your needs, you could also forego this process entirely and sell your inherited property as is to a cash buyer.

Measuring the emotional toll

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Losing a loved one is heartbreaking. We can easily become overwhelmed with everything that has to be done, that’s in addition to processing our own emotions. Though there’s no straightforward way to get through the grief that comes with loss, understanding the process of what happens with an inherited house can make it all less daunting.

Working through the process can take months. It’s important to know this from the outset, because otherwise you could get bogged down in the process.  Selling an inherited home eventually feels oppressive and burdensome if you imagine it will go quickly.

Typically, inherited homes go through the probate process, which can drag on for months. If there are multiple heirs, the whole thing can get even more complicated and can go on for even longer. There are dual problems here – the emotional considerations and needs of the family, as well as the financial pressures from capital gains and estate tax. Selling an inherited house has a whole host of pressure and stress.

Financial stressors

Adding to the emotional toll is the frustration of converting the property into cash by selling. Even when everyone agrees to sell the property, it can get complicated. Tax implications can be confusing, and inheritance tax is not easy to decipher. Any real estate transaction has tax implications.

Life insurance policies and expenses related to the loss of a loved one are another potential boost, but they can also be complicated. When a life insurance policy is bought, the assumption is that it will pay out to the surviving family upon the death of the individual. It isn’t always that easy, unfortunately.

This is all in conjunction with other financial issues that you might have outside of the loss of the loved one. If a family member has been a longtime caregiver for a sick loved one, they might have been drained financially already. At times, family might have to step back from their own jobs or juggle their own retirement in order to take care of an elderly or sick loved one.

Loss is never as simple or straightforward as we’d like it to be.

Find expert advice

Families should look into tax advice from an expert, either an estate lawyer or a tax professional, to ensure they are getting the best outcome. Federal tax and taxable home sale proceeds from the sale of an inherited home might not be clear.

Working with a personal representative who knows what the ramifications are taxwise gives loved ones a great deal of peace of mind.

Converting the property into cash by selling is complicated and sometimes confusing as taxes and governing laws must be factored into the equation. Property inherited sometimes comes with mortgage payments and lingering repair issues. Inherited property could have liens or back taxes. Oftentimes, retirement accounts, or retirement savings is not enough to cover all that is owed.

The Probate Process

Any property that’s inherited from an estate has to go through a series of legal processes. These are governed by the state and county that you live in, but on the whole they are similar. The whole process surrounding what happens to someone’s property when they die is the legal process called probate.

If the owner of the property had a legal will that was filed in a court, then some of the functions of probate can be skipped over. This is why it’s so important to have a legal will set up with a lawyer, because everyone dies. Everyone has property that will need to be addressed, even if they don’t leave something like an inherited house.

If the deceased owner didn’t leave a will, then the property goes to the next of kin. Next of kin is a determination that’s made by the state you live in, and there is a distinct legal hierarchy for it. Many people assume that they know who the next of kin is, but unless there’s a living spouse it might not be so clear.

Even in the case of a written a legally filed will, the majority of estates must go through probate. This is the government’s way of ensuring that the wishes of the deceased individual are followed.

Executor of the estate

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Each state has a specific set of its own laws that govern probate. Most of the time, the court will appoint an executor to carry out the instructions that are laid out in the will.

Instructions in a will are generally straightforward. They delineate how many people are heirs and what each person gets. If there’s an inherited house, that could either go directly to one individual, or it could be split among multiple people.

Probate laws govern the process of how property is given out. If there are any conflicts, the executor of the estate will lead the process through the courts until a judge makes a final ruling. If there is no conflict, many states allow for there to be no court involvement.

Executors often deal with the high emotions of family members who have lost loved ones. The level of stress and the emotional turmoil that families are under can translate into frustration with the probate process inheriting property and anger over the legalities.  

Types of ownership

In the case that a will names a single person as the beneficiary of the property, the probate process is simplified. The new owner doesn’t have to discuss anything with joint-heirs about what to do with the property. For instance, a single beneficiary can sell property for any reason and without talking to other family members.

Most of the time, ownership of inherited property isn’t that simple. In most cases, a will names multiple people as beneficiaries. When this happens, there are multiple owners of a single property.

It’s rarely the case that everyone wants to live in the home together or that they can all agree on selling it through the same process. Some insist on an estate sale and a pre listing inspection before talking to a real estate agent. Others are adamant that the purchase price won’t be too far affected by working with a cash buyer.

Multiple heirs

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When there are multiple owners, conflicts often arise. In this case, family members work with the executor of the estate to come up with a plan to sell the home or trade it. Even with estate taxes, capital gains tax, and property taxes, it’s often still worthwhile to sell the inherited house and split the proceeds. This can make everyone happy.

There are unusual solutions for multiple owners. An individual heir might chose to buy out other heirs for a percentage of the market value of the inherited house. There is a lot of legal process involved, but it also avoids dealing with real estate agents. This could involve getting the mortgage paid off, or it could involve refinancing the home.

Inheritance Taxes

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Luckily, most states aren’t subject to federal estate tax. However, keep in mind that if the property is sold again, the seller will have to pay federal taxes on the proceeds.

It’s possible to avoid paying taxes on the majority of the proceeds from selling an inherited home. Most states have a law that allows the value of the deceased person’s property to be stepped up to whatever its fair market value was on the day they died.  This is instead of using whatever value the property was at when the person actually gets access to it after probate. Remember, probate can lost for months or even longer.

Here’s an example. Say a couple purchased their home fifty years ago for $80,000. Today, it’s worth $200,000. In terms of inheritance, its “stepped-up” value will be set at $200,000. Now say that this couple had children, and those children have become beneficiaries now that both parents have passed on. If the children decided to sell the property, they will only owe taxes on the amount if it exceeds the basis price. For example, if the couple’s $200,000 home is sold for $210,000, taxes would be owed on $10,000 only. That’s a huge difference!

Capital gains tax

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Any gain that an individual makes on any kind of investment, whether it’s real property or a stock investment, is subject to capital gains taxes. There are two types of capital gains possible, long-term and short-term.

The only time capital gains taxes are owed is when an asset is sold. Short term capital gains taxes are owed for assets owned for less than a year. Long term capital gains taxes are owed for assets that have been owned for more than a year. All of these taxes are folded into the federal income tax that everyone must file every spring.

Long-term capital gains tax can range from 0% to as much as 20%. What that rate depends on the individual’s personal income and the filing status of their taxes. The higher the income status of an individual, the more money they’ll have to pay.

Short-term capital gains are taxed at a rate that’s the same as other kinds of income. This ranges from 10% to 37%, depending on income. Again, the higher the income level, the higher the gains taxes will be.

Let’s say that a home sells at a loss. This could happen if the home has dropped in value. In this case, individuals are eligible to apply a capital loss as long as they sold the home at fair market value in an “arm’s length transaction”.  This is when an inherited property is not sold directly to a relative at a discounted price.

Selling Inherited Property “As-Is”

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Selling the home of a deceased loved one as-is involves getting slightly less than home’s fair market value, but the tradeoff is that the family can get on with what’s next. This type of real estate transaction si quick and easy, and it involves much less hands on work from family members than traditional sales.

Real estate agents typically want a home to be staged and cleared out, as well as repairs made. In this way, working with a real estate agent can actually be a detriment emotionally. Families usually would rather get through the process quickly rather than pouring everything into this interaction.

Another consideration is the knowledge of the property. If an individual was not ever the primary resident in a home, then they might not know what issues there are and what repairs might be needed. Should an heir try to sell a home with undisclosed issues in a traditional sale, they could be liable for repair costs. Liability all depends on how the heir sold inherited the property, either as the outright owner or as the estate’s personal representative.

Tax Liability

If an individual is selling their own property, they often want to get the highest possible price. Inherited property is different because the proceeds are taxable income. Setting the list price for an inherited house, means considering both the tax implications and time investment.

When selling an inherited property for slightly less than market value, it’s possible to make even more money over time because there is less capital gains tax. Estate taxes are based on the tax filer’s personal income, but they’re also based on the amount that the property sold for.

The selling process for an inherited home has to take into account the tax rate and the possibility of capital gains tax. No one wants to pay taxes when they don’t have to.

Not to mention the faster you can sell the property, the more you can walk away with.

Time versus Money

With each passing day that a home isn’t sold, the financial implications are far reaching. Not only is there the issue of capital gains on the rising value of the home, there’s also the issue of operating costs. Bills, upkeep, and even the mortgage are continued expenses that have to be paid.

An inherited home almost certainly has an existing mortgage. If the previous owners had a reverse mortgage, then that debt could also be a consideration. Those bills don’t stop because the person passed away. They go on to the heirs until the house is sold and the mortgage is paid off.

If someone’s parents purchased a home from a previous owner, it could have sentimental value, but it could also have high costs.

Selling considerations

inherited house in need of repair

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Traditional home sales require the home to be cleaned and repairs to be done to the property. Potential buyers want to see that the home is in good working order. There’s a lot of time and energy that goes into preparing the home for sale. To attract buyers, a house has to be at a certain level.

Given the high tax rate and the high closing costs associated with selling an inherited home, a fast sale could be the best solution by far.

When a family needs to sell an inherited home, getting that property sold fast for a good price is the number one priority. It’s a good idea to work with a company that specializes in purchasing inherited properties.

These individuals can help navigate the legality, paperwork and answer any questions. These companies offer fast, hassle-free, all-cash closings, making the entire process simple and straightforward.

Working with a professional home buyer

It’s hard to even fathom what the next best step is in many of these situations.

There’s so much more to losing a loved one than just taking care of their inherited home. Professional home buyers buy and sell property every single day. They understand the process inside and out, and they can help families to figure out what’s the best way to deal with inherited properties.

Companies offer free consultations to anyone seeking advice. Working with a home buyer should never cost you out of pocket. 

Simplify the home selling process

Working directly with a professional home buyer simplifies the process. Sellers should work with a personal representative to tackle any issues and to figure out what the best options are. Everyone’s situation is individual, especially when there’s a loss involved.

If a seller isn’t satisfied with the services provided, or with the offer they’ve been given, they should always feel empowered to decline and move on. That being said, it’s always a good idea to bring an open mind to this process. What works best given the pressures surrounding this loss? How can people lean on supports when the process seems overwhelming?

The simpler everyone can make the process, the better it is for everyone. Especially the grieving loved ones. Keeping the process moving, even through probate and tax considerations, can make it all a little less of a struggle.

How to Sell an Abandoned Property in Raleigh, NC

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A house is more than four walls. It’s a place that people dream and it’s a place that memories are made. People put a lot of emotional energy into their homes, but they also put a lot of cold hard cash into their homes. Sometimes that all goes wrong, and suddenly there’s a need to sell an abandoned property in Raleigh.

It’s hard to imagine why a house would fall into a state of disrepair that would warrant abandonment. Property is the biggest investment that most people will make in their lifetime.  

Most people who need to sell abandoned homes come into them because of an inheritance or a rental property problem. Whatever the reason, selling an empty house is different from traditional home sales. 

That doesn’t mean that it’s impossible or that it’s challenging, it just means that you have to think a little differently. Selling North Carolina abandoned places can be a win-win for everyone involved.

How homes become abandoned

Abandoned property near Agnes Hospital

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Life is not a straight line, and neither is the home buying market. There are tons of different pressures on homeowners. Though it can be unimaginable that a property could fall into enough disarray that it could become a condemned property, it happens all too often. 

This is true even in the booming seller’s market that we’re currently in. Not everyone has the tools to sell their home, and the whole process can be hugely intimidating. For some people, it’s easier just to walk away from a house and ignore the problem. 

Here are three reasons why homes become abandoned.

1- High repair costs

Sometimes the cost to repair a home is simply too high to conceive of taking on the project. People often think that the only way to sell a house is if it’s in great condition and they partner with a real estate agent. They don’t realize that they could sell the home for an all cash offer to a we buy houses company or an investor without making repairs. 

Renovating a house that has termite damage or that as a significant mold problem can be totally overwhelming and it can seem impossible. Structural problems or previous damage from natural disasters can also compound issues that a homeowner is facing. 

These problems continue to snowball, especially when a homeowner doesn’t have the means to make the smaller initial repairs. After a while, it’s just too much to tackle. It’s easier to ignore a problem than to deal with it.

2- Emotional attachment

Abandoned property in Wake County

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A very common reason that people don’t want to sell a property is the emotional attachment that the family has to it. If the home has been in the family for many years and holds a lot of memories, people can be reluctant to let go of it. This is understandable, but it causes all kinds of issues. 

There’s also the issue of the overwhelming number of things that have to be addressed when someone passes away. The death of a loved one leaves a whole host of things to take care of. From the funeral arrangements to handling past debts to dealing with personal belongings, there’s so much to do. Losing a loved one is always unexpected, even after a long illness. You never know everything that has to be taken care of until it’s time, even if there was time to prepare previously. 

A home can stay empty for years while the probate process winds away. If no one is living in the house, the home can fall into disrepair. This abandoned state is not easy to come back from, which leads the family back up to #1 on our list. 

3 – Acts of God

Natural disasters are often referred to as “acts of God” in contracts and insurance policies. Hurricanes, earthquakes, tornadoes, and floods can be a harsh reality for anyone to deal with. Natural disaster prone places like coastal areas in North Carolina can be especially vulnerable to these problems, leading to more abandoned houses. 

The hurricanes that pass through North Carolina east of Raleigh can be devastating, especially in economically depressed areas. Small towns like Bunn, Knightdale, Roanoke Rapids, and Kinston, NC are all more likely to be affected by natural disasters. Flooding from local rivers like the Roanoke River and the Dan River can make houses totally uninhabitable. 

Once something like this happens, it’s difficult to come back from that kind of problem. Fixing the home can be held up by insurance denials. 

Problems with abandoned homes

A property can have all kinds of problems once it becomes abandoned. There might be issues with squatters coming to the house and living there. North Carolina squatter’s rights can cause problems for people who own the property. Not only that, but squatters can lead to legal problems as well. 

If a property stays empty for long enough, it could become condemned. In this case, the city of Raleigh or the Wake County government could step in. Eventually, the problem can lead to the house being forced to be torn down. The city can repossess a piece of property that’s posing a danger to the neighborhood because it’s in such a state of disrepair. 

Selling your abandoned house

House ready for demolition in North Carolina

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Neighborhoods that have abandoned properties located in them tend to bring the value of everyone’s home down. When there are dangerous structures, whether they are posted with no trespassing or not, it’s common for people to go inside. People will sneak into doors left opened, ignoring any information about the building and its safety.

While you’re not required to keep a property up if it’s not part of a housing organization, there is still a responsibility to the community to take care of a property. It’s good for everyone. Sometimes the best way to be a good neighbor is to sell the property so that someone else can fix it up or tear it down.

You don’t even have to empty the contents of the house to put it on the market. You don’t have to make repairs and you don’t have to go through a long process. Selling your house quickly, even if it’s in rough condition, is possible if you’re willing to take a fair price for it given the condition.

If you need to sell your abandoned house in Raleigh, there are a few steps you can take. It’s not as complicated as you might think!

1 – Assess the property condition

The first step is to look at the property and find out what kind of condition it’s in. You might need to bring in a professional property inspector or a real estate assessor. Contact a local real estate agent if you’re looking for a service like this in Raleigh. You can also consider working with Raleigh general contractor to find out what’s going on with the property.

You may want to do an unclaimed property search to make sure that there’s no other property owner out there that has a claim to the property. This is especially true if you inherited the property from someone you’re related to. This could involve checking with the superior court records to make sure that there’s no claim on it on record with the city.  

2 – Figure out what price you need

Depending on what your needs are, you might want to sell the house fast to a cash buyer for a lower price than market value. You can work with a real estate agent to find out what the market value is for the home. Another option is to contact a cash buyer in Raleigh to see what cash price you can get for the property. 

You might have back taxes that you owe on the property and need to clear enough to pay off the tax lien. If there’s still a mortgage on the house, you’ll want to clear enough to pay the loan off. Going into foreclosure on a distressed property is something no one wants to have to face. You can avoid foreclosure by getting a fast sale for a good price. Whatever that number is, make sure you know it.

What method you use to sell your abandoned property will determine what price you get for it. You’ll factor in the condition of the house when you do this, as you’ll be able to get a realistic idea of what your abandoned home in Wake County is worth. 

Thank you, next

Though it can feel totally overwhelming to deal with an abandoned house in North Carolina, getting it sold will give you a whole lot of peace of mind. You won’t feel the crush of the weight of this problem hanging over you any longer!

An abandoned house can be a huge financial burden for a property owner in North Carolina. Freeing yourself of this kind of problem will make you feel much better about the whole situation. What’s even better is that the property can then be used by someone who has a real need for it. 

Whether you sell your abandoned property to a real estate investor or to a family who wants to fix it up, it’s better than the home getting condemned and torn down. 

Are We Buy Houses Companies Legit | Charlotte, NC

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If you’re selling your house and are looking for a great price with quick turnaround, you’ve probably heard about cash buyers. These investors or investment companies are easy to find and often even reach out to Charlotte homeowners who put their house on the market. The big question is, are We Buy Houses companies legit?

What happens when you sell to an investor

These companies look for people in Charlotte with distressed homes or burdensome houses. They want homeowners who are willing to sell their house for less than market value. Once a seller shows interest in the property, the investor will find a time that they can see the house. They’ll then estimate the value of the home and write up a no-obligation cash offer

The buyer will draft a contract that doesn’t involve any real estate commissions or hidden fees. Part of the point here is that they take out the hassle and to get the deal done fast. The whole process can be expedited by foregoing a real estate inspection or a home appraisal. This is how the home can get to closing in as little as seven days. 

When you sell your home to a we buy houses company, you’re essentially selling to an investor. They’ll buy your home as-is and for less than market value. After that, they’ll make any necessary repairs and then sell the house for a markup. The profit from that markup is how they make their money. 

There’s a tradeoff here. The homeowner in Charlotte, NC gets to sell their home fast and have the cash in their pocket. The investor gets to make a profit off of putting in the work and understanding the real estate market. 

Quick closing and motivated sellers

Distressed properties in Charlotte

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A We Buy Houses company in Charlotte is looking for a seller who is motivated. This could be for any number of reasons, from the loss of a loved one to divorce to job loss. The economy is constantly going up and down, and the real estate market has a lot of wavering needs. Knowing all of that information is how a cash buyer is able to understand who is ready to sell and how fast. 

When someone inherits a house in Charlotte, they might not want to keep it. A change in job situation and the need to move fast can prompt a homeowner to want to sell a house fast. It could be none of the above as well. Sometimes people just don’t want the hassle of a traditional real estate sale. 

Staying away from We Buy Houses scams

Buy houses investors condo in Charlotte

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It’s important here to understand that all of these are legitimate reasons to sell a house fast. We Buy Houses scams take advantage of these reasons, using people who are in a vulnerable situation. Most of these companies are above board, but unfortunately not everyone is.

The best way to steer clear of a we buy houses scam is to do your research. Look up the person or the company online thoroughly and find out if there are any red flags. You want to see a robust web presence with lots of information online about who they are. 

Good real estate investors have a website and client reviews. You can also look them up on the Better Business Bureau website. 

Buying a home for cash

A great question for home sellers is this – how can a real estate investor have the kind of cash to buy a house without a bank loan? The answer is that most of these companies are in the business of flipping houses. They started off small or with an investment from some other business. Then they built their business over time. 

This is a business model that works for lots of people. Though a home is the largest purchase that most people make, for an investor this is just what they do. It’s all about building up the capital and making smart business decisions. Sometimes these companies rely on an angel investor to infuse cash into the business. Most often, they just go there through hard work.

Understanding that a cash home buyer got there honestly is an important part of trusting them with the sale of your house. A trustworthy home buying company has the cash sitting in their bank account, ready to buy your home. They’ll be able to prove this during the process by providing you with a proof of funds document from the bank.

Traditional sale process

The traditional home sale process usually involves a single buyer connecting with a single seller via a real estate agent. If a house is in poor condition or needs significant repair costs invested before it’s livable, that can scare off prospective buyers.

The open market is not easy. Oftentimes, the seller ends up having to pay closing costs. Even if they get market value and are working with a good real estate agent, they can still end up getting a raw deal.

Real estate agent take a hefty commission for their expertise and the effort they put into selling a house. A clever real estate agent can certainly help get the fair market value for home sellers, but the real estate industry isn’t made for homeowners. The open market is geared towards making money for the agents and companies involved.

A homeowner can often end up getting more money when they go with an all cash offer from a buy houses investor.

Home repairs and home buyers

Significant repairs don’t scare off houses investor and all cash buyers. Local investors in Charlotte can help homeowners sell fast and get to that closing date. The home selling process with a buy houses team is totally different and can save thousands for the homeowner.

Buy houses legitimate cash buyers look for homes that need repairs. These houses sell fast because they give a cash buyer the opportunity to get more money in the long run. A buy houses investor will take that distressed property and put the work in to fix it. Then they’ll use clever real estate tactics to stage and sell the home, making more money even though they had to pay cash to start.

Buy houses investors look for property owners facing foreclosure or who have significant repair costs because these are things they can address. Even given the closing costs, they can still turn enough profit to stay in business.

Ugly houses can still be great houses! The local market in Charlotte is perfect for buy houses companies and real estate ages alike. It’s possible to get fair market value even if your home is less than perfect.

Rental properties

Even if you’re selling a rental property, you can still work with a buy houses company. Rental income is always a boost for a buy houses investor.

Buy houses reviews will tell you that these companies buy all kinds of properties for cash. A rental property is a great investment that can generate income in the long term. That’s even true if it’s a rental house that needs significant repairs. A houses investor is often willing to take on any kind of property.

Selling fast isn’t usually a scam

Real estate transaction

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It can sound like it’s too good to be true when a seller comes to you to offer you fast cash for your house. There are times when scammers try to take advantage of motivated sellers with burdensome homes, but it’s easy to be a smart seller in this situation.

If you see a “Sell Your House Fast” sign or a “We Buy Houses” sign, always look for a website or a company name on the sign. Working with a company that is not just an individual will help you to avoid scams. When a sign only has a phone number listed, there’s a better than even chance that it’s a scam. 

Find a legit cash buyer

The best way to avoid a we buy houses scam is to look for the pressured sale. If they are trying to push you hard into signing a contract, then it’s time for you to go elsewhere. There are lots of options. A fast closing is certainly a good thing for everyone, but you should always feel comfortable with ever step along the way. 

An honest real estate investor will never ask you for money upfront of any kind. Not a dime should exchange hands before closing. There are still closing costs associated with a cash sale, but they don’t come up until the very end and should come out of the selling price. 

Never, ever give money to someone who wants to buy your house. This is the number one red flag, and it’s a great way to get scammed.

Buy houses companies area legitimate way for home sellers to avoid real estate agents and get the cash that they need.

Top 8 Places to Move to in Charlotte, North Carolina

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One of the hardest things about moving to a new area is figuring out where to put down roots. You probably know few people and don’t have a great sense of what it’s all about. Finding the best places to live in Charlotte isn’t as simple as a Google search, and you’ll obviously want to do your research before you make a decision. Choosing a Charlotte neighborhood with a great

Whether you’re coming from another part of North Carolina or somewhere further afield, finding your place in the Queen City should be an enjoyable experience. There are so many great Charlotte neighborhoods and wonderful little suburbs in and around Charlotte that there’s something for everyone.

Finding your place in Charlotte, NC

There are plenty of pros and cons to living in Charlotte, North Carolina. For families moving to the area, the natural questions are always going to be “Where should I live in Charlotte?” and “What are the best places for families in Charlotte?” 

Exploring your options means finding the safest neighborhoods and the best subdivisions. The quality of schools is a consideration. So are the available activities for families or for couples. 

Charlotte neighborhoods have plenty to offer, but this is also a southern town. Things are spread out over considerable distances and public transportation won’t go everywhere. 

Your neighborhood in Charlotte is going to be the center of your community. Finding the one that fits you best is so important! Here’s our roundup of the best ‘burbs and the greatest neighborhoods in Charlotte.

1 – Uptown Charlotte

Charlotte Uptown, City, Night, Evening, Flags, Plaza

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The centerpiece of any city is its downtown, and Charlotte is no different. The heart of the Queen City is home to the headquarters of major companies like Wells Fargo, Duke Energy, and of course Bank of America. 

The Charlotte Knights, the Charlotte Hornets and the Carolina Panthers all have sports venues in Uptown Charlotte. Pro sports is a point of pride here, with famed basketball legend Michael Jordan a fixture in the city, thanks to his ownership of the Charlotte Hornets. Downtown is where the flagship North Carolina sports teams are all situated. 

Culture is also a big deal in downtown Charlotte. The Charlotte Ballet, the Charlotte Symphony, and the Mint Museum all call Center City home. There are award winning restaurants, live music venues, and art aplenty that will fit anyone’s taste all seated within the walkable footprint of the city. This walkable Charlotte neighborhood is perfect for young professionals who don’t have to worry too much about public schools or housing costs.  

2 – Ballantyne

Pergola near Lake Wylie in Charlotte, NC

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Around twenty-five thousand people live in Ballantyne, an upscale neighborhood in the Charlotte area. It’s seated right at the southern edge of the city, near the border of South Carolina. 

One of the most desirable neighborhoods in the Queen City, Ballantyne is built with wide streets and big yards. There are several golf courses within the neighborhood. It’s a thriving part of the city with a distinct feeling that sets it apart from the other best Charlotte neighborhoods. People flock here for a reason. 

Ballantyne Corporate Park is packed with more than four million square feet of office space. These house the headquarters of companies such as ESPN regional TV, Metlife, Babcock and Wilcox, and more. Families moving to Charlotte are often drawn to Ballantyne because it’s so close to the companies that they relocate with. 

3 – the Fourth Ward

There are four wards in Charlotte, but the most popular is the Fourth Ward. This neighborhood has meandering, tree lined streets and majestic Victorian homes. 

This area was revitalized back in the 1970s when Bank of America partnered with the Junior League of Charlotte to grow local businesses and revamp public spaces. It’s close enough to Uptown that the commute is easy for work or for leisure. That proximity is a major factor in people choosing the Fourth Ward. 

In recent years, there’s been a lot of commercial development in this part of Charlotte. There are condos and businesses blended together with the stately homes. The mix is eclectic but also inviting. 

4 – University City

Charlotte is home to the University of North Carolina at Charlotte. Immediately surrounding the campus is a neighborhood called University City, and it’s a fantastic place for families and professionals alike. 

Near the edge is the Charlotte Motor Speedway, and Concord Mills Mall isn’t far either. This part of Charlotte is known for its cozy neighborhood feel and its great schools. Home to more than 160,000 people, including Concord and Harrisburg, this is one of the largest neighborhoods and largest business districts in Charlotte. 

Businesses thrive in this area of Charlotte, North Carolina. University Research Park is a center of scientific research and has a lot of job opportunities for transplants. There’s great shopping nearby and tons of entertainment. The only Ikea in North Carolina or South Carolina is located near University City. Young professionals will love these home prices here and the southern charm of this area that’s right on the South Carolina border.

5 – North Davidson (NoDa)

Charlotte has a wonderfully vibrant arts district called NoDA (North Davidson). It’s close to downtown and it’s bursting with wonderful things to do and beautiful little houses. It’s a vibrant, thriving artistic community makes it a sought after place to live in the Queen City.

NoDa was once home to a wealth of textile manufacturing companies. Mill workers lived in rows of modest houses. Lots of these are now renovated or restored. There are now lots of art galleries, unique dining, and local shopping options in the NoDa area. A particularly wonderful part of this neighborhood is its walkability. For families with kids, this is a fantastic Charlotte, NC neighborhood. 

The close proximity of this residential area in Charlotte, NC to employment opportunities is one reason most residents stop through this area full of charming bungalows, even if they don’t live here. This area of Charlotte offers good access to public transit for those who live in Charlotte, NC. The historic homes are a great boost too!

6 – Barclay Downs

A top–rated neighborhood in North Carolina as a whole, not just Charlotte, is Barclay Downs. This is a prestigious part of the city. Schools here are highly ranked. Of everywhere in Charlotte, this is one of the most exclusive places to live. It’s got a rich history, mature trees, historic bungalows and an art gallery or two tucked in abmong the metro area population.

Former NC Governor Cameron Morrison once owned a three thousand acre farm in this area, which has since been parsed out and sold off to create a thriving neighborhood. The Colony, Southpark Mall, and Piedmont Row offer tons of shopping options. There’s a great deal of highly ranked dining here. 

The large houses and wonderfully maintained streets are an essential part of this remarkable Charlotte neighborhood. On average, homes here go for a minimum of five hundred thousand dollars. 

7 – Myers Park

Similar to Barclay Downs, Myers Park is a wealthy and exclusive neighborhood in Charlotte. This was also a former farm, once owned by John Spring Myers. It was his brainchild to transform he cotton fields into rolling neighborhoods, and it came off in spectacular fashion. 

It took many years of planning and development to make that dream become a reality. The neighborhood gave free landscaping to create cohesion for those first residents.

Nearby are suburbs like Sedgefield, South Park, Dilworth, and Foxcroft. Leaders who made Charlotte the banking and business hub that it is today can be found in this neighborhood. This is one of the most prestigious neighborhoods, far away from Bank of America Stadium or the hustle and bustle of East Boulevard. There are no high rise condos here, and Myers Park is home to some of the best suburbs. It’s conveniently located miles south of Lake Norman, close to the Southpark mall and lot of sporting events.

8 – Commonwealth

Water, Swiming Pool, Garden, Vacation, Charlotte

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One of the newest and trendiest neighborhoods in Charlotte is Commonwealth. This neighborhood is reasonably priced, with most houses priced under three hundred thousand dollars. Affordability is a major selling point of Commonwealth.

This little neighborhood is charming. It’s characterized by cottages and bungalows that have lovingly redone and updated in the last twenty years. It’s bordered on one side by Central Avenue and on the other side by Independence Boulevard. 

This part of the city ranks highly in both livability and affordability. There are lots of things to love here, including high graduation rates at local schools and plenty of local amenities. 

Choose your neighborhood in Charlotte

Whether you’re looking for a suburban feel near downtown, a part of town that has low crime rates or upscale restaurants, the best neighborhoods are spread all over Charlotte. There are constantly community events and sporting events to go check out. There’s also all of the fun on Lake Norman or wandering through the historic district neighborhoods in Charlotte, NC.

Young professionals can get excited about low housing costs in the Charlotte metro area. The Charlotte Mecklenburg school system is highly rated. The tree lined streets are an ideal place to raise a family. Whichever Charlotte neighborhood you choose, you’ll be sure to find a place that feels like home.

Whatever has brought you to Charlotte, finding a great place to live should feel great. There are so many options, from artsy NoDa to upscale Myers Park. Whatever your taste and your needs, you’ll find somewhere wonderful to call home in Charlotte!