When a home owner has exhausted options such as a long-term payment arrangement or short-term payment restructuring, but still are unable to keep up with bond repayments, it may be best to consider selling the home on the open market before legal action ensues from your home loan provider.
This will not only give a better price on the home but will also save on other expenses and adverse credit ratings typically incurred during the legal process involved with bank repossession of your home.
According to Calvin Ndlovu, head of operations at FNB Home Loans, all banks offer a solution to distressed customers to sell their properties on the open market. “What most customers don’t realise is that the bank is not interested in owning property,” explains Ndlovu. “We would far rather help customers realise the best value for their property than go down the route of attaching a property and forced selling through a Sheriff’s auction.” To advance this matter FNB released their QuickSell tool in 2009 to help customers to sell their properties on the open market and realise better value, before going down the legal route.
Ndlovu believes that the benefits of proactively selling your home on the open market outweigh the stresses of the legal process and selling the house on a sheriff’s auction. He explains that it is in the bank’s best interest to help the customer realise the best possible price for their home, this will help the customer reduce any potential shortfall as well as being in a better position to financial recovery. To assist with this most banks have solid systems and tools in place, says Nldovu, this is why a distressed consumer should approach their bank for assistance.
“We contract established, well-known estate agents that invest the necessary time, energy and money in marketing the homes on all their channels,” says Ndlovu. “We also give the customer a free valuation and an indication what price to expect, so that the customer has certainty on the process going forwards.”
An added benefit is that selling on the open-market will often entail possible discounts and free services. A consumer may receive discount on the shortfall, if any, after the sale of the home, and could arrange with the bank for a payment plan to pay the shortfall over a period of time, at a favourable rate. Nodlovu recommends contacting your bank to find out exactly what help they offer their home loan clients during this process.
Everyone can agree that having to sell your home due to financial reasons is a very emotional situation. However, home owners should consider the implications of going through a lengthy legal process and time consuming process of selling their homes on auction. Ndlovu says that, often clients are in a better position after the sale on the open market than on sheriff’s auction. “On average, over the last year, homes that are in the QuickSell programme have spent around two months on the market and realised in excess of 85% of their value prices.” This is a far better result for customers that are in distress as they are able to fairly quickly go through the selling process and get good value, whereas houses sold on auction don’t fare as well. It must also be remembered that, once a home has been attached and sold on sheriff’s auction, the customer not only has the potential shortfall that will need to be repaid, but also an adverse judgement on their credit record.
Having an adverse credit record will mean that applying for any additional credit will be difficult, and this will also weigh against them when trying to rent another place. The best course of action remains to seek the bank’s help before legal action is taken.