Although foreclosure rates have slowed in the past few years, it’s still a common occurrence for many American families. And when the bank looms, many have the same question: “Can I sell my house before foreclosure?”
In short, yes.
Up until the point that your home is sold away at auction, you can attempt to sell your home and pay the lender what you owe. Getting a home sold before foreclosure will require speed and efficiency, but it is possible. You just need to get aggressive.
Read on, and we’ll walk through everything you need to know about selling your home fast.
Facts on Foreclosure
Outside of selling your home, one may be able to apply for a loan modification. Loan modification is a form of loss mitigation and can help to restructure your monthly payments into something more affordable.
Certain states also have government programs intended to help those hit with foreclosure in times of financial hardship. The Hardest Hit fund is one of the most popular.
Why Sell Your Home?
The period before your house sells at auction is pre-foreclosure. As we indicated above, it can last weeks, months, or even years.
During this time, you can attempt to settle the debts you have with your lender. Selling your home can be a way to do this.
If you sell your home for the right price, you can possibly make enough to pay off everything owed to the lender. This includes the back mortgage payments and any incurred penalties or fees.
When you put your home on the market, make sure to tell your lender that you’re planning to list the property with the intention of paying off the mortgage. Your lender may actually postpone the foreclosure auction to give you time to find a buyer.
Selling your home can help you avoid damaging your credit score via foreclosure.
Selling a Home Fast and Efficiently
A foreclosure isn’t a fun situation for anyone, lenders included. Even though it allows them to recoup their money, the foreclosure process can be a logistical nightmare for lenders, and one they’d rather avoid.
This is why many lenders are open to homeowners selling their homes in the pre-foreclosure period. Some lenders may even accept a short sale.
A short sale is when a homeowner sells their home for less than what they actually owe and the lender accepts the loss as a way to avoid going through the foreclosure process.
In any case, selling your home in the pre-foreclosure period is a time-sensitive issue.
It’s highly advisable that you hire an experienced real estate agent who can properly evaluate your home and get it sold. Many real estate agents also can act as negotiators when it comes to lenders and may be able to convince lenders to take a short sale deal.
The most important thing they’ll do is help you to avoid costly mistakes.
When selling your home in pre-foreclosure, don’t get caught up in matters of lost equity. It may be frustrating that the anticipated sale price of your house is less than what you paid for it. But overpricing your home can land you in an even worse situation.
Your real estate agent should be able to show you a Competitive Market Analysis that displays what similar homes in your area have been selling for. When you need to sell fast, you may have to drop the price up to ten percent of the neighborhood average.
Stay in Communication with Your Lender
The absolute worst thing you can do in the pre-foreclosure period is to try and hide from your lender. Your avoidance will likely only speed up the process and deter any small amount of mercy and grace they’re willing to give you.
Calling your lender and explaining your financial situation may help lead to a solution that’s more beneficial to you. No one likes talking about foreclosure, but open communication provides more options and opportunities.
Outside of a short sale, there are other things a lender may suggest or agree to. Some lenders will allow for a loan restructure or a lower interest rate, and will allow you to pay back missed payments over time.
Some lenders will also allow for forbearance, which is a reduction or suspension of payments for a short period of time. This is typically in situations where a homeowner has a short-term financial problem that will get resolved soon (like being between jobs, for example).
Can I Sell My House Before Foreclosure?
The foreclosure of a home can do terrible damage to your credit score. Any homeowner who’s asking, “Can I sell my house before foreclosure?” should know that they can, and more importantly, that they should.
Selling a home can help pay off debts to a lender and keep a homeowner in good graces with the banks. With a clear focus and the right attitude, homeowners can sell their homes and avoid financial disaster before foreclosure fully hits.
Check out our blog for more real estate tips, tricks, and advice.
