Possibly Stupid Question about House Repossession

seven-day-weekend

Please excuse me if it IS a stupid question!

I've been wondering for a while now, having read of people having their homes repossessed, and one thing keeps springing to mind.

Why don't the people just sell their home instead of allowing it to be repossessed? They'll lose it either way, but surely it's better for them if they sell it themselves?

Or have I missed something obvious? Sorry if I have and don't wish to offend anyone.

Broken_hearted

Maybe they in denial and don't think it will happen.
or- They can't afford to sell pay estate agents, solicitors and such
or- They've tried but times run out

sandralovescats

They could actually just hand the keys back - which would not cost them a penny.

thesaint

My friend had her house repossessed, she was so stressed in the months prior to this that she couldn't deal with selling the house which in itself a stressful time.

flowerofscotland

I think it is difficult to generalise as every case will be different.

A couple of points spring to mind however - I believe that making yourself "intentionally homeless" means problems with benefits/social housing and "handing the keys back" isn't free of consequences. Any shortfall between what the house is sold for and the outstanding mortgage will still be owed.

Not to mention that houses can be difficult to sell - some people may be trying to sell but run out of time before finding a buyer.

I just hope I never have to face this situation - makes me even more determined to pay off my debts as soon as I can.

Debt_Free_Chick

sandralovescats wrote:

They could actually just hand the keys back - which would not cost them a penny.

I'm afraid this is an urban myth. You are still liable for the outstanding mortgage. The lender will probably sell the property, but if this does not pay off the mortgage, then you will still owe any balance. And the interest continues to be added right up until the point the property is sold.

The lender will go through the repossession process and completing the sale could take very many months.

sandralovescats

Debt_Free_Chick wrote:

I'm afraid this is an urban myth. You are still liable for the outstanding mortgage. The lender will probably sell the property, but if this does not pay off the mortgage, then you will still owe any balance. And the interest continues to be added right up until the point the property is sold.

The lender will go through the repossession process and completing the sale could take very many months.

Whilst this is true, it would have resolved a lot of the problems incurred with repossession.

lynzpower

there is a lot of misconception around making your self IH - in that it cannot be "reasonable to occupy" if you have not got the money to pay the rent.

I have overturned a number of intentionally homeless decisions on the back of this.

I dont know why so many of us dont. I expect people worry about not being able to make houses look like something off house dr as they have no money.

However, there are 2 good options if the house has equity,
1) price to sell
2) send to auction where you will have a buyer sorted within 28 days of auction as this is auction law.

one thing is tho if you fetch more than 16k your benefits can be stopped so this can be a consideration of some.

thesaint

lynzpower,
It is the norm to complete within 28 days at an auction, but it isn't "auction law".

seven-day-weekend

So it appears that although there are various reasons why people don't sell it themselves, that it is in fact better to do so?

Yes, Lynzpower, if there is equity in the house taking it to auction seems a good idea. Although I take the point about the 16k capital. We sold a property and ended up (even after the mortgage and all the debts were paid off) with £25k capital, so had we have had to rely on benefits, this would have stopped them stone dead.

Although isn't it still better in this case to live off the capital until the balance reaches under £6k and then apply for benefits again? At least you have £6k instead of nothing (and maybe still owing some).

However, I do understand that people may be far too stressed/disorganised /in denial at times like this to always do the most sensible thing.

I hope maybe this thread will go some way towards persuading someone who may be in danger of having their house repossessed to have a re-think about trying to sell it themselves. It's got to be better for them.

seven-day-weekend

Broken_hearted wrote:

.
or- They can't afford to sell pay estate agents, solicitors and such

You don't have to pay these until the house has sold.

I suppose if there is no equity in the house then these fees could be a problem.