Blog > Navigating Hardship in Real Estate: How to Sell Your Home During Financial or Emotional Distress

Navigating Hardship in Real Estate: How to Sell Your Home During Financial or Emotional Distress

by Theresa Bastian, Guest Contributor

THERESA BASTIAN is a seasoned Realtor with over 20 years of success working with buyers, sellers, and investors. Past clients rave about her ability to serve their needs, whether they’re buying or selling. She helps her clients make educated choices about one of the most important financial and personal decisions of their lives. Her ability to help divorcing couples untangle their real estate holdings has been recognized by Texas Realtor Magazine and she has provided expert witness testimony on property valuation for divorce hearings and mediations.

Theresa enjoys spending time serving her community in many ways. She is currently the Secretary/Treasurer of the Board of Directors for the Travis County Appraisal District. She also serves on the Grievance Committee for the State Bar of Texas and chairs the Legislative Management Committee for the Austin Board of REALTORS®.

But above all of these accomplishments, her proudest role is mom. Theresa’s son Lukas is a United States Marine and her daughter Sophia currently attends the University of Arkansas.

The most common types of hardship when selling a home that I have run across in my more than 20-year real estate practice are people experiencing financial hardship or emotional stress due to death, illness, or job loss, or people going through divorce, which is often a combination of both financial and emotional stress. All of these life situations force people to reevaluate where they are with their financial situation and housing. Most often these situations are not intended—which means they were not planned for.

I have been divorced twice myself. The second time was especially devastating since I was forced to walk away from a business and home we owned together. I wasn’t sure I would ever recover from that financially (or emotionally, for that matter). But I have, thankfully, and I’ve made it my mission to help others going through difficult situations like divorce and financial hardship so they can see there is light on the other side of that tunnel.

The biggest mistakes

Selling a home during a time of financial or emotional distress or divorce is entirely different than a “regular” sale. Typically, when a family or individual decides to sell their home, it’s because they’re moving toward something more exciting. Perhaps it’s an opportunity to move for a job transfer or better school district, or maybe it’s to finally get that house with a pool or the acreage you’ve always wanted. These types of moves are something sellers have planned for, maybe even dreamed about. It’s also a plan that likely occurred over a longer period of time, sometimes years. But when people are forced to sell due to hardship, it is almost always a sudden, unexpected, and undesirable change.

Unfortunately, this short timeframe and lack of ability to prepare can cause sellers to make some pretty devastating mistakes. People who have to sell their homes in adverse hardship situations are typically highly stressed and emotional. They find themselves responding to decisions with knee-jerk reactions, limited creativity, and almost a sense of desperation. They are at risk of being taken advantage of because they feel overwhelmed, like they have no options. A dramatic change has been forced on them. They are eager to jump on the first solution that looks like a life preserver. For all these reasons they often become prey to an unethical segment of the real estate industry.

A distressed seller may think, “Well, I can’t afford to replace the carpets that the pets have ruined, and I can’t install new appliances, so I’m not going to get very good money for my house.” Then when the first person comes around who offers them any price at all, they just agree to it. Sadly, there’s a whole sector of this industry that thrives on people saying yes because they think they don’t have any options. There are companies and people who deliberately use misleading marketing to prey on those in distress when they are likely to have high emotions and make impulsive decisions.

That just drives me insane, because you need to realize that even in a distressed situation you still have options! A good Realtor is going to relieve some of the decision-making burden. A professional Realtor will lay out the options so you can see what is legitimately possible so you don’t end up settling for thousands and thousands less than you should. Without such expert help, the situation might snowball into your equity in the home being lost to foreclosure, or allowing your home fall into disrepair and lose value.

I honestly feel it’s my calling to protect my clients from those who are out for a quick buck and have no problem taking advantage of people when they are most vulnerable. My goal is to take a bad situation and find a way for you to move forward from it into a brighter future, not to let a bad situation spiral into something even worse.

How to avoid getting taken advantage of

To avoid getting taken advantage of in times of vulnerability, a seller really needs a uniquely focused expert. You need to find someone who is passionate about helping you navigate the complexities of selling during a time of challenge—whether that means emotional or financial hardship, or a divorce. You should not just talk to one Realtor and agree to their first proposal. I understand that it’s difficult to have the mental bandwidth to interview multiple agents, especially when you’re already dealing with all of the things that go along with a divorce or declaring bankruptcy or a job loss. It can feel overwhelming to make those calls and set up appointments. If you really don’t have the ability to do multiple interviews, I suggest you look for someone with expert training in working with distressed or divorcing homeowners.

Divorce concerns to keep in mind

I have earned the Certified Divorce Real Estate Expert designation. This means I am one of less than a hundred Realtors in the entire country who have gone through the training to successful facilitate the real estate aspects of a family law case. I also became a Certified Distressed Property Expert and have prevented hundreds of families from losing their homes to foreclosure during the financial downturn in 2008-2009. There are only a small number of agents who take the time and spend the money to get this specialized knowledge of how to navigate such serious situations.

You may be tempted to work with a neighbor down the street who dabbles in real estate on the side, or your mom’s friend from church who has her real estate license but is mostly retired these days. There are a lot of wonderful, well-intentioned people out there who can be just as dangerous for you as the vultures.

These Realtors may well care about you, but do they have the experience and specific training to navigate the world of banks, short sales and pre-foreclosures?

Do they have the skillset to work with the world of family law and judicial orders?

They don’t realize the complexity of family law issues, such as how to interpret a judicial order or negotiate when two spouses don’t agree on what should happen next. And that inexperience can set off a cascade of events that results in a more difficult, time-consuming, stressful sale that ends up causing your house to sell for less money.

No money, time, or energy to fix up the home

Since every market and every situation is different, there is no one-size-fits-all answer to whether you need to invest the time and energy—and especially the money—to fix up a home before listing it for sale.

I can tell you that most properties that I’m brought in to assist with in a distressed selling situation do need work. I have created a system that outlines the top 3 scenarios that sellers in times of hardship should consider.

Sell as-is
Do a bare minimum of repairs
Execute a more extensive make-ready process

A good Realtor, a true professional, is going to be able to project what price you can expect to sell for and the timeline for each of these scenarios. I take all aspects of your unique situation into consideration, as well as all of the possible repairs and updates, then evaluate them on these factors:

The time involved
The energy involved
Will it make a difference to your bottom line, and if so, how much?

This way you can make an educated decision on how to proceed. I often negotiate with one of my preferred vendors to either get a discounted rate for distressed sellers or to postpone all or part of their fees to be paid at closing.

Basically, when you feel like you don’t have any choices, I provide options. Life happens to everybody. It doesn’t matter whether your job was downsized or your marriage ended—you don’t deserve to lose your financial stability. And when you’re embarrassed and overwhelmed and just trying to get through the day, I take the worry about selling the property and the next steps for your living situation off your plate.

A caregiver’s crisis

I was able to help a woman whose parents lived out of state and were having major health problems. The client needed to move closer to her parents and felt completely guilty that she hadn’t done this sooner. To make it worse, she’d lost her job the previous year and had gone through almost all of her savings.

Her house was in poor condition, but she didn’t have the time, funds, or mental energy to prepare it for a sale. When I met her she was seriously considering walking away and letting the bank foreclose. This would have been such a mistake! She had built up almost $200k of equity in the house! Even selling as-is would have been better than walking away! But I knew that it would be a highly marketable property if we could just get the basics done for the next buyer.

I earned her trust and put a plan together that allowed her to pack up her personal items and valuables that she wanted to take with her so she could get on the road to be with her parents.

With her permission, I acted as the project manager and arranged for new carpet and paint, a landscaping refresh, and to have the remaining household items donated.

Even after she paid these expenses from the proceeds of the sale, she profited over $150k—money she really needed. And now she doesn’t have a foreclosure on her record! I felt honored to have had the chance to help her get a fresh start.

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