Can You Sell Your House in Foreclosure?
If your house is in foreclosure or pre-foreclosure, you’re certainly weighing all of your options. And amidst the confusion and concern, there’s one question that most homeowners find themselves asking: Can you sell a house in foreclosure? In this article, we’ll cover the answer to this question and more.
What is Foreclosure?
Before we get into the nitty-gritty of selling a house in foreclosure, let’s get clear on what it actually means for your home to be in foreclosure.
Foreclosure occurs when a borrower (i.e. the homeowner) fails to make the promised mortgage payments to the lender. In response, the lender initiates a legal process that allows them to repossess the home so that they can liquidate the asset and obtain the money that’s owed to them. A foreclosure can also happen when the homeowner fails to pay homeowner’s association (HOA) fees or property taxes.
Missing one payment does not initiate a foreclosure process. Your lender does not want to initiate foreclosure and will almost always try to work with you to prevent it from happening. In fact, federal mortgage servicing laws typically require a lender to wait until a homeowner is at least 120 days delinquent on payments.
How to Sell a House in Foreclosure
Okay, now that we’ve set the record straight on what it means to have a house in foreclosure, let’s get back to the original question: Can you sell a house in foreclosure?
The simple answer is yes. However, how you sell your house is highly dependent on the stage of foreclosure, the type of debt, and other related circumstances.
Pre-foreclosure. A home is considered to be in “pre-foreclosure” when you miss more than three payments. At this point, the bank will contact you and issue a notice of default. You’re still the owner, but the bank is letting you know that they may take action if something doesn’t change.
If you’re going to sell your house, it’s best/easiest to do it while it’s in pre-foreclosure. At this point, you’re still the owner and you have the ability to call the shots. Nothing has changed (other than the fact that you’ve been warned something will change if payments aren’t made).
Foreclosure. Even if the mortgage company has initiated the foreclosure process, you still have a right to sell your home up until the point that the bank does so. However, it’s unlikely that you’ll be able to sell your home the traditional way (hiring an agent, listing on the MLS, etc.).
If you’re already in foreclosure, your best option is a short sale and/or selling your house fast for cash to a local buyer who is willing to purchase the home as-is. And because you’re already in the foreclosure process, you’ll have to submit all offers or bids to your lender for approval.
Typically, if the offer is even close to competitive, the lender is going to say yes. They don’t want to take a property to auction. (There are too many unknowns.) They’d rather get their money back with a short sale and move on.
Don’t Fall for Foreclosure Scams
As soon as a property goes into foreclosure, investors and companies will start swarming like vultures. And while they’ll all promise to rescue you from your dire situation, many of these individuals are scam artists who want to take advantage of your situation. It’s important that you’re able to distinguish between those who can actually help and those who want to make a quick buck.
If something sounds too good to be true, it probably is. And if you decide that you do want to consider someone’s offer, always do your due diligence and research the company online. Never sign anything before first doing your own homework.
We Buy Houses for Cash
No homeowner ever wants to find themselves in a situation where a lender is talking about foreclosing on the property. It’s a frustrating and stressful place to be. But it’s nice to know that there are ways out.
At Samuel Property Group, we work with homeowners who are in pre-foreclosure and foreclosure to lead them out of bad situations and, hopefully, give them a fresh financial start. We buy houses for cash and can close in as little as 14 days.
For more information, please contact us today! We would love to learn more about your situation and see if there’s a way we can partner together to help you sell your house fast.