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If your house is in foreclosure, you likely fell behind in paying the mortgage, and you may also be incurring the lender’s attorney fees for your delinquency. Different people have different feelings and reactions when in this situation. From feeling sad, ashamed, disappointed, in panic, or even paralyzed or in denial, and having the instinct to ignore the problem, as if it could just go away…but it won’t, and when in pre-foreclosure, time is of essence. But wait! All is not lost. Foreclosure doesn’t happen overnight. It’s a long process, for you and the lender. The worst thing you can do is do nothing.
Do not wait until your foreclosure is 30 days away, when the lender takes possession of the house with the intent to auction it.
Are you in Pre-Foreclosure or in Foreclosure?
Although the term “foreclosure” is often used to describe both circumstances, there is actually a significant difference that comes down to ownership.
Pre-foreclosure is part of the process to foreclosure. Most times, it starts 3 to 6 months after your first missed payment.
At that 3-month mark, you’ll likely receive a Demand or Notice to Accelerate letter from your lender to pay up in 30 days, or they’ll foreclose on your house. From the date of notice, it may be 2 to 3 months till the scheduled sale of your house at auction.
Foreclosure is at the end. Your house is no longer yours. The bank repossesses it or sells it at auction. The foreclosure is also marked in your credit history for a period of seven years, making it extremely hard for you to be approved for a new house mortgage.
Pandemic Exceptional Circumstances
Due to the coronavirus pandemic, the government has offered mortgage relief options and the type of mortgage you have may have different requirements. Many mortgage lender servicers couldn’t even start the foreclosure process before January 1, 2022 and without contacting you to review your options.
Can I Sell My House in Pre-Foreclosure?
If you’re behind in payments because you fell on hard times, you can try to strike a Forbearance Agreement with the lender, but this does not void what you owe. Payment is only postponed. It is also less likely to be approved, if you’re already in pre-foreclosure, to request forbearance.
If you get approved for forbearance, this will give you more time to sell your house or, if you change your mind, to try to make up for missed payments.
The time you have is important because, even in a hot market, depending on the condition of the house and its location, it may be hard to sell within a short timeframe, using the traditional method of listing it with an agent.
Selling your house during pre-foreclosure is one way to prevent foreclosure, and if it’s done early enough, you may be able to get the market value for your property. If you want to list it, it’s important to find a top agent who can help you sell it with the intention of paying off the mortgage and potential lender attorney fees.
In the potential of a short sale, you need to notify your lender, as it requires their authorization.
Can I Sell a House in Foreclosure?
When the house is foreclosed, meaning the bank takes ownership, the bank will usually send an agent to help you relocate. Most people think a sheriff will come and kick them out, but that only happens if you fight the bank.
Once the bank forecloses the house, it starts the courthouse steps to have it sold at auction. It is not immediate. Until the day of the auction, you can still attempt to sell. Most banks and servicers would rather avoid the auction, if it can be sold prior, and may even be willing to extend terms and negotiate to have it done.
Step 1: Calculate What You Owe
If you’re behind in mortgage payments, there are likely late fees attached. Also, you may have accrued fees owed to the mortgage company’s attorney which are associated with your delinquency.
Add up the sums of what you owe, plus any interest, and subtract it from your estimated sale price.
Step 2: Subtract Selling Fees Too
That’s right: it costs money to sell a house. Selling fees include staging and cleaning costs, as well as the realtor commission, closing fees, seller concessions, and moving costs. Deduct these from the sale price.
Why all the deductions? Because you want to find out if selling your house will cover what you owe your lender, as well as closing costs and selling expenses. With any luck, you’ll have some money left over. If, however, you’re in the black, then perhaps you should negotiate with your lender to do a short sale.
Step 3: Hire a Realtor or Sell FSBO
If the foreclosed house goes to auction, you may still end up with debt due to legal fees. Plus, you will pay taxes for the “forgiveness” of the mortgage. The best situation is to get it sold and hopefully, get some of the excess funds.
Your timeframe to sell is short. Your options include:
- If the house is in a hot market, a good location, and in great shape, it may sell fast with an experienced Realtor, who knows how to navigate the extra paperwork and evaluate potential buyers.
- Otherwise, your best option is to sell it yourself to an investor. Investors with experience in purchasing foreclosed properties know how to speak with banks and have their own lawyers ensure a successful transaction.
Step 4: Whatever Path You Decide – Keep the Lender in the Loop!
Keep your lender informed of progress throughout the house selling process. Communicating with the lender is vital. Many will work with you to get it sold rather than foreclose.
SolidOffers Can Help You Sell Your Foreclosed House
When time is of the essence, your best option is to sell your house in foreclosure to a real estate investor. SolidOffers screens hundreds of real estate investors, confirming their reputation, and connects you with legit investors in your market who can help you. Not all investors are the same. When the house is already foreclosed and set to be in auction, you need an experienced investor who will essentially do all the heavy lifting, using their resources to work it out with the bank.
If you are in pre-foreclosure, or your house is already foreclosed, contact us ASAP, so we can ease the process of selling your house in foreclosure.