Property owners in financial distress – what to do?

To fulfill their dream of homeownership, many are willing to take on debt through a loan. However, those who lose their jobs or are unable to return to work due to dismissal, company insolvency, or illness often struggle to make mortgage payments. What options are available for homeowners facing financial difficulties?

First and foremost, property owners should contact their bank and seek a financing solution. If it becomes clear that the loan cannot be repaid in the long term, a real estate expert should be consulted. A real estate agent can provide owners with the best possible advice in their emergency situation and work with them to find a quick, effective, and tailored solution.

Avoid foreclosure

One thing property owners in financial distress should avoid is a foreclosure auction. In such cases, owners cannot negotiate the price they receive for their property or who will acquire it. Furthermore, owners often receive less money than the property is actually worth. To avoid a foreclosure auction, swift action is required. Therefore, it is advisable to contact a real estate agent as soon as possible.

Sell, retire, or rent?

Owners can sell their property and move into a rental apartment. Or they can sell their property and continue living there. In this case, the right to remain is registered in the land register. This approach is known as reverse mortgages. The property may also offer rental potential. However, since owners in emergency situations often need to sell quickly and require significant funds for loan repayments, selling the property is usually the better solution. Because this is a forced sale, owners should not proceed without a professional real estate agent. The agent will also arrange for a professional property valuation, which needs to be completed quickly in such cases.

Selling real estate with or without right of residence?

Those who opt for a reverse mortgage have a choice of various payout models and types of annuities. The right to live in the property can be granted for life or only for a specific period. Owners can receive the purchase price as a lump sum or as a monthly "pension" from the buyer. A combination of both payout methods is also possible.

Whether owners choose to sell their property with or without a right of residence, the sales process remains the same. But beware! Especially in a distress sale, potential buyers often try to negotiate the price down. Since time is often of the essence, owners frequently end up selling their property below its value. This doesn't have to be the case. Owners can rely on the negotiation skills and professional marketing of a real estate agent. A higher selling price makes repaying the bank loan easier and faster.

Do you need support for the quick and discreet sale of your property? Contact us! We would be happy to advise you.

You can find more information here:

https://de.wikipedia.org/wiki/Notverkauf

https://de.wikipedia.org/wiki/Zwangsversteigerung

https://www.handelsblatt.com/finanzen/immobilien/immobilienverrentung-mit-dem-eigenheim-das-einkommen-aufbessern/24577956.html?ticket=ST-7854216-5hV79ODe1XZPRBFmETUm-ap1

https://www.finanztip.de/haus-verkaufen/

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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