Downsizing Your Home to Manage Debt

We’re told that the economy is on the rise again, which should, in theory, mean an increase in finance for all of us. Unfortunately, though, some of us are still feeling the effects of this generation’s economic crisis. If you find yourself short of money and in need of paying off a large debt, you may have an escape clause thanks to your home.

The thought of selling your house may seem drastic, but that may be what is needed in desperate times. Downsizing can ultimately pay off a huge portion of your debt, but only if you approach the sale in the right way. Here are a few things you need to be aware of.

Getting Maximum Value

Selling your home, especially when you don’t really want to, can be a traumatic experience. Especially if you have to compromise on the price. In all likelihood, your asking price will take a dent, especially if you want to sell up quickly. House prices aren’t yet on the mend, so you will have to compromise on market value.

If you want to sell your house fast, it doesn’t necessarily mean a huge loss in value, providing you take the right steps. Do not settle for buyers that will try and tempt you by making an offer of 70% of the valuation. Trust me, they will come along, but you must stick to your guns at all costs. Even when pursuing a quick sale, you can still recoup around 94% of market value, which isn’t a great loss.

Should You Sell Independently?

There are pros and cons to chasing a sale by yourself. Recruiting the help of a real estate agent will benefit you in a few ways, but at a premium price. You have to weigh up in your mind whether it’s financially viable for you to seek assistance. But, ultimately, that is the best method for a number of reasons.

First of all, real estate brokers have significantly more reach than you do. They’ll be able to attract more potential buyers, and thus increase the likelihood of a sale getting off the ground. They’ll also have the means and resources to make sure everything is above board. It’s important that all paperwork checks out, as this minimizes the risk to yourself.

The Next Step: Buy or Rent?

Before your house is sold, you’re going to need somewhere else to live. You’ll certainly have to get this figured out before the sale goes through. But should you look at buying another property or renting for a while? My advice would be to rent elsewhere, at least until you’re back on your feet.

By the time you’ve sold off your home, and given a fraction of that to the real estate company, there may not be much left over to pay off your debts. Let alone buy a new house outright. For that reason, it’s advisable to rent for a while, but choose somewhere that allows you to live within your means.