How To Sell A House Before Its Foreclosure

Posted On Wednesday, 28 October 2020 22:20

Realistically speaking, losing your home to foreclosure can be one of the most frustrating experiences you’ll face in your lifetime. Consequently, you may ask yourself whether you can sell your house before the foreclosure proceedings. Well, the answer to that question is ‘yes.’ There are ways that can help you get your property sold before you’re sued in a foreclosure case. 

To get started with this process, below are the steps to consider to make your home fly off the market without getting foreclosed.

What Is A Foreclosure?

Foreclosure is a legal procedure wherein a lender tries to regain the amount of a loan through legal means by forcing the closing of the property used as collateral for the original loan. When the borrower fails to make regular payments on the mortgage, the lender will seize the property and sell it at auction. At this point, the lender can use any funds that it has collected from the sale to recover the outstanding balance of the debt. 

As a result of foreclosure, the mortgagor can lose the house they live in and all the personal and real property that’s used as security for the mortgage loan.  

Tips For Selling A House Before Foreclosure

Now that you’re aware of what foreclosure is, it’s time to get to know some ways on how to sell your house before getting it auctioned by the lender. These can include:

1. Looking For Homebuying Companies

One of the best tips for selling a house before its foreclosure is to look for homebuying companies that are willing to buy your property in an as-is-where-is basis for cash. Unlike the traditional sale methods, selling your house to cash homebuyers means you don’t need to work with some real estate agents and wait for them to sell your house. This is a very beneficial setup since time is of the essence when you’re on the verge of a foreclosure process. 

Technically, you own the property until the time your lender puts it on an auction sale. Thus, if you want to avoid eviction in Las Vegas or wherever you may be, you shouldn’t wait for a long time to make your move through. 

To get the most out of this method, here are a few steps to consider:

• Look for cash homebuyers online. Once you have the list, give them a call to inform them about the sale of your house.
• Once you get in touch with them, provide your property details, such as the size, the year it was built, and any other major updates that you’ve done recently. However, when it comes to any significant issues, you have nothing to worry about because they purchase properties as-is.
• After getting the details, they’ll schedule a visit to your home or ask for a virtual tour to see your property.
• Once the tour is done, they’ll immediately make a cash offer, and it’s up to you to accept it or not. When you accept the offer, you can avoid foreclosure and, more importantly, move anytime you want without worries. 

2. Pursue A Short Sale

Another great way to sell your home before its foreclosure is to proceed with a short sale. Typically, a short sale refers to a process of selling your property below the market price. If you consider this method, the following are the steps to keep in mind from the get-go:

Write A Letter To Your Lender – If you want to avoid foreclosure, the first thing to do is to write a letter to your lender expressing your desire to prevent your property from getting foreclosed. In your letter, you can ask them whether a short sale can be an acceptable option. Luckily, some lenders would prefer losing some money in a short sale than going through the stress and paying more money in a foreclosure proceeding.
Let The Lender Prepare A Short Sale Contract – Once your lender approves the short sale, the next step is to request them to prepare a standard agreement that tackles the short sale. When making the contract, a specific provision stating the bottom line of selling the house below the market price should be included. Also, be sure the agreement states that the proceeds of the sale will satisfy your obligation under the loan. More importantly, the contract should also emphasize that you’re not responsible for any deficiency in your obligation. To make sure all these provisions are included in the agreement, find time to review the document closely with the help of a lawyer who can explain the terms to you.
Place The Home On The Market For Sale – Once everything is ready, you can now put your home for sale on the market at the agreed reduced price. And, since the price is below the property’s actual market price, you can increase your chances of getting it sold sooner than later. 

Conclusion

There’s nothing more frightening than the idea of losing your house to the different phases of foreclosure, especially if you’re trying to keep your family in it. However, there’s a much better alternative than giving up on the house and leaving it to your lenders and potential auctioneers. By following the tips mentioned above, you can actually sell your property before the foreclosure process begins. 

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