5 things to do when your rental home goes into foreclosure
Published on: Friday, December 02, 2022
By:
Reg Ching, FMT
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The worsening economy could mean that your rental home goes into foreclosure.(Envato Elements pic)
On a macro level, the global economy is sliding deeper into a recession that most are unwilling to officially acknowledge despite the warning signs.
Once the drivers of economies and stock markets, the groups formerly known as FAANG (Facebook, Amazon, Apple, Netflix, Google), MAMAA (Meta formerly Facebook, Alphabet formerly Google, Microsoft, Amazon, Apple) or MANTA (Meta, Amazon, Netflix, Tesla, Apple) have all suffered significant declines and layoffs in 2022.
Recent announcements of the resulting retrenchments include:
11,000 at Meta
10,000 at Amazon (to start with more coming)
4,000 at Cisco
6,000 at HP
10,000 at Google
Regional giants Shopee’s Sea Limited slashed 7,000 jobs while Grab rival Gojek laid off 1,300 employees.
With every economic downturn, comes the inevitable loss of income to support most workers’ largest expenditure, the mortgage, often leading to foreclosures.
To make matters worse, many investors have taken on multiple properties, leaving many more renters than normal, exposed to a situation of being stuck in limbo when their rental home goes into foreclosure.
Here are five steps tenants can take if their rental property goes into foreclosure.
1. Talk to your landlord
As uncomfortable as the conversation may be, when it comes to finances or financial difficulties, understanding the situation is key to making the right decisions moving forward.
Find out when the property goes to auction and if possible, work out a deal with the landlord or lender if a viable option exists.
In the worst case, knowing the timeframe in which one may face eviction as early as possible, is important to planning a move and alternate living arrangements.
2. Talk to your building management office
Condominium tenants should inform and consult the building management of the situation as early as possible.
Losing access to key cards or to a rental unit is not only inconvenient but can also disrupt and negatively impact both work and personal life.
Communicate and work with management to reach an understanding to avoid any disruptions before a permanent solution is found.
3. Talk to a leasing agent or lawyer
Real estate lawyers understand the procedures of auctions and the potential scenarios each renter may face.
Understanding the rights of each party and exploring legal options will minimise the stresses of facing an unknown outcome, the uncertainty of losing a home, and how to deal with a new owner or looming eviction notice.
Experienced leasing agents can determine a property’s value which can be used to predict the potential of a successful sale at an auction.
They can also proactively start searching for comparable housing alternatives or negotiate a new tenancy with a new owner or landlord.
4. Talk to the auctioneer
Grasping the process of the auction and their schedules will help plan the upcoming move. Auctioneers can provide updates if a property sells or the next upcoming auction date if it does not.
With each unsuccessful round, a new auction date is usually announced within a month where reserve prices can drop 10% or more.
Buyers could pay cash on the same day or have up to 90 days to complete a purchase, offering renters some idea of an expected eviction or moving date.
5. Talk to the bank’s lawyer
Banks want nothing more than to get a bad debt or liability off their books and may be open to negotiating a deal or finding an agreeable solution.
A bank’s lawyer is equipped with the tools to negotiate an out-of-court or private deal which may be a win-win for all parties involved.
Facing a potential loss at auction, the bank is incentivised to offer alternatives to resolve the matter, providing a good opportunity for someone looking for a favourable deal.
The upside
Although the prospect of involuntarily moving is inconvenient, a looming recession brings favourable market conditions for tenants and also presents the opportunity to negotiate a better rental agreement or even move to a better location for the same price or less.
Turning a bad situation into a good one is not only possible but a reality many may soon face – and even move forward successfully if one’s prepared.
Reg Ching is a walking quadriplegic (OKU), digital nomad, business consultant, medical cannabis advocate, and cryptocurrency enthusiast. Follow his journey at regching.com
