Selling a House in Foreclosure: Everything You Need to Know

Selling a House in Foreclosure: Everything You Need to Know

If you’re facing foreclosure, there are several options on the table. Here’s what you can and can’t do when selling a house in foreclosure.

Even though the housing crisis is more than 10 years behind us all, there are still some specters that haunt us. Foreclosure is a reality that faces many of us and keeps us from being able to reach our financial or wealth related goals. When you’re selling a house in foreclosure, it means that you’re going to have to know what your rights are and how you could lose out.

Here is everything you need to know about selling during foreclosure.

Do You Want to Halt Foreclosure?

If you’re stuck selling a house that’s in foreclosure or about to fall into it, you can do a few things to pump the brakes on that. When you fall behind on your mortgage, you shouldn’t hide it from your lender. They’ll find out and start the proceedings if you try to avoid them.

When financial problems become severe and you need to deal with your mortgage, there are a few ways to solve things f you simply don’t have the money.

You could start by trying to restructure the loan. When you take the time to work with lenders to restructure your monthly payments, you can repay missed payments over time. They might even reduce your interest rate since you’re working with them now.

See if you can go into forbearance if you want to reduce or suspend payments for a short period of time. If you’re going through a temporary financial hardship, then you’ll have time to sort things out this way. For any family who just had a breadwinner lose a job or had a loved one fall ill, this is a smart way to reduce financial difficulties.

Look For some new sources of revenue if that’s a possibility. For anyone who has a lot of potential assets to be liquidated, there’s a good potential to find some extra money in cluttered closets or untapped mainly assets. You could even ask family for a loan or a gift while you work on catching up with your finances.

How To Sell When You’re In Foreclosure

After finding out that you’re in foreclosure, you can try to sell your home right up until the moment it’s sold at auction. You can also try to sell the house unless the bank takes control of the house and possesses it. During the time when you’re still the owner, it’s considered to be in “pre-foreclosure”, but you’re still able to settle your debt with the lender.

Avoiding foreclosure is possible if you sell your home and get enough to pay back all of the payments, fees, and penalties. While you won’t own the house anymore, you won’t have that foreclosure sitting on your credit report any longer. That could do some serious damage to your credit.

Tell your lender if you’ve listed the property for sale and intend to pay them off. If they respect this plan, they might postpone foreclosure in order to give you the opportunity to find yourself a buyer.

Selling as soon as possible takes much of the pressure off of you to make a deal quickly. It gives you more time to get what you’re looking for in your property. Work together to come up with a schedule for how long you’ll allow the property to sit up for sale.

In some places, a lender might only give you a month before they auction the property. In other cases and other places, you might get more than a year.

If you decide to sell, tell your lender that you plan to list the property for sale with the intention of paying off the mortgage. Ask the lender to postpone a foreclosure auction or sale and give you a chance to find a buyer.

Get an Agent Who Listens

When you’re in a rush to sell your property, the best way to do it is through an agent. An agent knows the market, they know what people want, and they can help you by properly marketing your property for sale. A good agent will help you understand how much your home is worth so you can set your expectations.

Talk to them about running a market analysis to see how much you can get on the market. Make sure that it’s enough to pay off your mortgage so that you can ensure that you’re not left still owing money.

The right real estate agent is going to be able to help negotiate with lenders to see if they’ll be willing to make a deal. They might accept a lower price if it means getting their money sooner.

Consider a Short Sale

Lenders get really frustrated with foreclosures and can be unpersonable to people in them. They’re upset because there are all kinds of financial, legal, or even PR headaches to have to deal with. Some lenders will agree to a short sale if it means that you’re going to sell the home for less than you owe if it makes things easier.

Not every lender is going to agree, as it’s quite a desperate action. Lenders aren’t giving out money in hopes that they’ll lose out, but they also know how much it costs to have to chase down homeowners.

After you’ve filled out a lot of paperwork and spent the time getting into this situation, you can make the case for allowing you to do a short sale.

You’ll avoid a nasty mark on your credit score when you take this route.

Selling a House In Foreclosure Can Save You

Selling a house in foreclosure can be stressful but it can also save you a headache later on. When you sell your house during foreclosure, you might be able to suspend the foreclosure and save your credit.

If you’re trying to get out of this home to invest in a rental property, check out our guide for tips.

 

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