“Proactively selling your home before legal action will almost always give you a better price for your property as well as save on other expenses and adverse credit records that are incurred during the lengthy and stressful legal process,” said Calvin Ndlovu, head of operations at FNB Home Loans.
There are many avenues a homeowner can explore, this includes a long term payment plan i.e. six to twelve months extension, or a short term payment plan, in the event of them not meeting payments.
“However, if repaying your home loan is just not possible, customers need to seriously consider getting their bank’s help to sell their property on the open market, rather than going through the legal process,” stated Ndlovu.
Most banks offer an opportunity to struggling consumers to sell their properties on the open market.
“FNB’s own tool, QuickSell, was introduced in 2009 to help customers to sell their properties on the open market and realise better value, before going down the legal route,” noted Ndlovu.
She further remarked that contrary to popular belief, banks are hardly interested in owning property and prefer to assist customers in realising the best value for their property.
Ndlovu further outlined a few noteworthy benefits that far outweigh going through the entire legal process and selling in a ‘sheriff’s auction’:
Established tools and systems
“Most banks have solid systems and tools in place to help customers through the selling process. It is in the bank and the customer’s best interest to realise the best possible price for their home as this will help to cover any potential shortfall and leave the consumer in a good position to re-establish themselves financially,” added Ndlovu.
Discounts and free services
Other useful offerings are the possible discounts and free services.
“FNB offers discounts of up to 25% of the current outstanding home loan balance when there is shortfall after the sale of the property and any remaining shortfall after going through the QuickSell process will be repayable over 10 years, interest free.
“We contract established, well-known estate agents that invest the necessary time, energy and money in marketing the homes on all their channels,” Ndlovu noted.
The customer is also usually privy to a free valuation and given an indication of what to expect. It is this advisable to contact your bank to find out what they offer their customers in terms of help through the process.
Property is sold quicker with a better selling price reached
“On average, over the last year, homes that are in the QuickSell programme have spent around two months on the market and realised in excess of 85% of their value prices, which is a far better result for customers that are in distress as they are able to fairly quickly go through the selling process and get good value.
“Houses sold on auction don’t fare as well as those sold on the open market and go through a very lengthy, time consuming process before they are finally sold on auction,” stated Ndlovu.
Customers are in a better financial position after the sale
Selling one’s home can be a very stressful process, and thus homeowners very seldom stop to consider the possible high legal fees that they could incur.
“Once a home has been attached and sold on a sheriff’s auction, the customer not only has the potential short-fall that they will be expected to continue paying for the next 30 years, but also an adverse judgement on their credit record,” added Ndlovu.
Additionally having an adversative credit record will mean that applying for any additional credit will be challenging. In turn this will also count against them when trying to rent again in future.
“Most rentals will require a credit check, and it now becomes very difficult for a consumer, who has gone through the judgement process, to rent a place to live,” warned Ndlovu.
It is advisable to thus seek the bank’s help before legal action is undertaken.
“Getting into financial difficulty and the process of going into arrears and the legal action that follows is highly stressful and customers sometimes try to avoid this completely, by not engaging with the bank. However, the best possible outcome for the customer and the bank in these situations is to make use of the solutions and tools that banks have in place to realise the best possible price for your property,” explained Ndlovu.