In a down market, financing is often tight for buyers. Even creditworthy borrowers get rejected because of rigid underwriting. In order to facilitate a sale, consider financing the deal yourself -- called "seller financing." By financing the sale, you may sell your home sooner and enjoy a financial return for the effort.
How does seller financing work? You, as seller, act as the lender, but rather than actually loaning cash, you extend credit against the purchase price of the home. The buyer signs a promissory note and trust deed in your name. If there's an outstanding mortgage, the lender must agree to the deal. There are numerous variations, including equity sharing, lease options, financing only a second mortgage, and more.
You'll need to check with a real estate attorney or other professional proficient in seller-financing contracts to learn more and to determine whether you can handle the risk. (To learn more about seller financing, read Nolo's article Seller Financing in Home Sales.)
Auctions are not only for foreclosures. Selling your home at auction can attract prequalified buyers and, if successful, can reduce the carrying costs associated with a home languishing on the MLS for months. Because an auction is designed to set off a bidding war, the final price could exceed that of a negotiated sale.
Again, professional help is key. You need a recognized auction house and a real estate agent, attorney, or other professionals to assist you in deciding whether an auction would work for you and what type of auction to have and to hold your hand throughout the auction process.
If, perhaps, you can no longer afford the mortgage or have already missed payments, consider a short sale as a way of avoiding foreclosure. In a short sale, you sell the home for less than you owe to the lender and the lender agrees to forgive the outstanding balance on the mortgage. But it's a risky way to go, since the lenders are notoriously slow to grant their approval. (To learn more about short sales and other options for avoiding foreclosure, see Nolo's article Short Selling Your Home: Should You or Shouldn't You?.)
For a comprehensive guide to selling a home during difficult economic times, see Selling Your House in a Tough Market, by Ilona Bray and Alayna Schroeder (Nolo).
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