How to Survive Financially If You Have to Sell Your Home Fast

Selling Your House Fast? Get Cash & Secure Your Future

If you’re at the point where you have to sell your home fast, either because you’ve missed or about to miss a mortgage payment, you’re facing a divorce and will need to sell the house to avoid tax implications or other financial aspects of the divorce, or you’ve hit on hard financial times and can no longer afford your home, you’re probably just putting one foot in front of the other and trying to get through each day as it comes, not thinking about what’s going to happen after you’ve sold your home.

However, there are some things that you can do now in order to help you survive financially once you’ve sold your home.

First off, even if you are forced to sell your home fast to a cash buyer, there is a chance that you’ll get some money at the closing out of it. According to the 2024 ICE Mortgage Monitor, the average American household has a loan to current value of 45.9%, meaning that there is a gap between the market value of a fully repaired home and what is owed on the mortgage in the average American household.

The Gap Between Your Home’s Market Value and What You’ll Get for It When You Sell to a Cash Buyer

That doesn’t mean that you’re going to get all of that value. First off, to get full price, you need two things:

  1. A pristine house in move-in condition: This means that you’re going to have to have all of the repairs done, a fresh coat of paint, new floors, and everything spotless when you move out of the property. That is going to cost time and money, and if you’re in a struggling situation, you probably don’t have enough of either of those to get the house into tip-top condition.
  2. Time: If you’re in a tight financial situation and you’re worried that you’re not going to be able to pay the mortgage or that you may wind up getting stuck in a dire tax situation because of a mortgage, time is not on your side. To get the top dollar for a house, not only does it have to be in pristine condition, but you have to be able to wait for the right buyer to come along, and, most likely, to get the financing that they need to buy your home.

I’m not saying this to knock on you or your situation. I understand the difficulties of being under the gun and barely being able to make ends meet. However, I am telling you this up front so that you have the right expectations. You might be able to get some of that equity, but you’re not in a position where you can get it all.

Why?

  • If you can’t get the house in tip-top condition, then the buyer who comes in will have to make that investment: the repair is going to cost the buyer time and money, just as it would you, but, also that time in repairing the property means that the buyer has to have an empty house that could otherwise be earning money. The buyer will need to account for that foregone income and also for the risks involved in a market turn, finding other things that need repairing that popped up, or a need for that tied up capital elsewhere. THe buyer has an opportunity cost in having an empty property while it’s being rehabbed.
  • You need a buyer to come in now: Because you need a cash buyer to buy your property fast, you’re going to have to incentivize that buyer to purchase your house as opposed to another house. That means lowering your expectations and price.

    Let’s look at an example.

    Let’s say that we get two people who reach out to us. One is in Cleburne and one is in Burleson. Cleburne

    • Market value: $300,000
    • Mortgage: $175,000
    • Repairs that need to be done: $25,000, 2 months
    • Potential monthly rental income: $2,500
    Burleson
    • Market value: $250,000
    • Mortgage: $125,000
    • Repairs that need to be done: $5,000, 1 week
    • Potential monthly income: $2,000

    If you just take market value minus mortgage minus repairs, you’d think that the Cleburne owner could walk away with $100,000 and the Burleson owner would walk away with $120,000.

    But, it’s not that simple.

    First off, neither seller, if they have to sell their houses fast, are going to get that much money.

    But, the Cleburne seller is in a worse situation because the costs of the repairs are higher and will take longer, and the foregone rent is more.

    The Burleson seller is in a stronger position from the beginning.

    Furthermore, there aren’t that many fish in the sea.

    The true number of cash buyers isn’t all that high.

    On a busy year, for example, we will do maybe 5-6 deals. Some years, it’s less than that.

    Many of the people who will cold text or call you or send you generic postcards are hustling for a group of investors.

    Capital is limited.

    Cash Buyer vs Traditional Buyer: Speed & Benefits

    As the ICE Mortgage Monitor report explained, about half of the homes that go into foreclosure wind up getting sold at the courthouse steps, and that’s because of several reasons:

    • Not enough buyers who can react that quickly: In Texas, one third of home buyers are cash buyers, meaning that 2/3 of them have to get financing. That means that they have to get approvals, which take time, and which may not happen. A seller could be tied up for a couple of months only to have a potential buyer walk away because they can’t get financing.
    • The owners don’t act in time: once you miss a mortgage payment, the clock is ticking. You could have about five months before your property is up on the courthouse steps in Cleburne, Weatherford, Hillsboro, or Granbury. Almost 20% of properties stay on the market for more than five months. It takes Realtors time to get the property ready for a showing. By waiting, you’re lowering the possibility that you can escape the situation that you’re in without a foreclosure on your record.
    • The owners get offers but try to ask for too much. In negotiations, there’s something called a zone of potential agreement, or ZOPA. For the seller, the ZOPA should be range from paying off the mortgage and maybe a little beyond that to get by on until you get on your feet to the full market value of the property. The ZOPA of a buyer is very determinant on their situation. If they’re looking at a lot of potential houses, then their upper limit will be much lower. Often, the buyer will make an offer that should be within the seller’s ZOPA, but the seller refuses, trying to extract a little more when they really don’t have that much negotiating power.

    Again, I’m not trying to bash on you if you’re in the situation where you’re facing needing to sell your house fast. I’m simply laying out the situation and where the negotiating powers are. In most cases, if you’re needing to sell your house fast to a cash buyer, the paramount importance of your need to sell fast to avoid foreclosure or a bad tax situation because of a divorce or to avoid having to deal with an inherited house that could suck up months or years of your time and tons of money in rehab means that you’re going to be more limited in what you can ask for.

    Maximizing Your Proceeds From a Fast Home Sale

    That said, in many cases, you can walk away from a situation like this with something.

    You want a fair deal. A fair deal means you get out of the situation that has been hanging over your head and your buyer gets a deal that is better than any other deal they have in front of them and they have the potential to make money from the situation. While buyers can be individually charitable, they’re offering to buy your house because they want to make money from it.

    So, unless you’re in a position where there is no profit to be made in a deal unless you’re just bought out for the mortgage, you can usually expect to get something out of it.

    Recently, we purchased a property at a significant discount to the market. The seller had listed the home at a little more than 50% higher when suddenly, they had an acute financial emergency. They had to drop the price by 36% because they needed to sell the house ASAP to get liquidity and to get out from under the house. We knew what they owed on their mortgage roughly, but offered them about 60% more than that. They got money out of the deal, and they were able to get out from under the house rapidly. We also gave them a free lease back for a short period of time so that they could prepare to move and find another place.

    We worked with them to find a solution that was acceptable to both sides. Sure, we’re probably happier than they are. I’m not going to sugar coat that they were in a tough situation, and we were able to help them out, but we also helped ourselves out in doing so. But, we could have started out the negotiations at what they owed, and we didn’t, because there was room enough for us to make what we wanted to make in the purchase while giving them a good chunk of cash to walk away with as well as a little breathing room before they left the house.

    Life After Selling Your House: A Fresh Start

    But, you’re still going to come out of this situation financially staggered, regardless of the outcome. So, there are things that you can do now to prepare for life after your sale.

    • Make the house more enticing: No, you don’t have to go Ty Pennington and do Extreme Home Makeover. In fact, if you try that, you’re going to be financially worse off than you are. Unless you’re extremely handy, leave that to the experts. Any repair that you do that isn’t top notch will likely not be valued at all by your buyer, because they’re going to have to do the repair again. I’m talking simple things. Put on a fresh coat of paint on the walls. Wood ash your front lawn. Weed it. Cut the grass. Polish wood fixtures with Murphy oil. Regrout your tiles. These are all simple things that even a person who isn’t handy can do if they’re willing to put in the work. There’s a Reddit thread full of ideas of cheap home improvements.
    • Line up your next place: One of the benefits in working with us is that we partner hand in hand with a Cleburne and Crowley-based property manager who has a lot of properties that her team manages. We can likely find you a place to land temporarily while you get your feet underneath you.
    • Line up your friends and family to help you move. Movers are not cheap. They usually cost between $140-180 an hour in Johnson, Parker, Hood, and Hill counties. If you can rent a truck and get some friends to pitch in on the move, then you can usually pay them in pizza and beer. Along those lines, start scouting out around stores, particularly grocery and liquor stores, to start getting boxes together so that you can pack things up. There’s no need to pay U-Haul for boxes when stores break down and get rid of tons of them every day.
    • Seek counseling: There are a lot of non-profit financial counseling agencies and grief/divorce counseling agencies. See if your church or other social/civic organization offers such counseling. You’re going through an extremely stressful situation, and it builds up in you, whether you know it or not.
    • Ask for a short leaseback: Even if you can’t get the top price, you can usually ask for a short leaseback. We’ve done that several times. For example, we did a two month lease for a family who had a special needs child that they couldn’t move right away. That gives you time to try to find another place, another job, and get your affairs and finances in order.

    You also need to do some self-examination on your own financial situation.

    I used to be a Certified Financial Planner, so I was always big on budgeting. But that’s not all. Here are some things to do in order to give yourself a financial audit to try to prevent this situation from repeating itself in the future:

    • Identify where you’re spending money each and every month. Without keeping on top of it, it’s amazing to see how quickly money can run out of your account.
    • Stop your subscriptions. Yes, you may think that you need that Netflix subscription, but until you’re back in a strong financial position, you can live without it. That’s what the library is for. I know, for example, that you only have to be a Texas resident to use the Houston digital library system. You can get audiobooks and Kindle books for free through them.
    • Identify your priorities: You need food. You’ll need shelter. You’ll need clothing. You’ll need reasonable transportation. All of those need to be in the reasonable category. If you have to sell your car and exchange it for a less flashy, reliable version, then do it. Don’t go out to eat. Eat at home. Use cloth instead of paper towels. There are tons of frugality bloggers out there who can give you inspiration. Believe it or not, making all of the painful changes at once is better than trying to drip and drip away at them. You’re going to be psychologically more able to handle them if they’re all at one than if you try a little at a time. Furthermore, you’ll quickly discover how you’ve adjusted to the new lifestyle and you don’t miss a lot of things like you thought you would.

    Going through a time like this, when you’re selling your house quickly to a cash buyer, is very stressful. However, with some planning ahead of time and some intentionality for how you’re going to react to what has happened and make changes to adjust to your situation, you can truly use it as a bottoming, an inflection point, and get back on your feet. If you don’t plan, you may wind up losing your house or in a worse financial situation, and continuing a slide downwards.

    If you’d like to talk to us and see if we can help you out, you can contact us or fill out the form below, and let’s see if we can come to an arrangement that helps both sides out.



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