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Selling a Foreclosed Home: What You Can and Can’t Do

Avoid Foreclosure

Foreclosure is a long and heartbreaking process for a homeowner. It’s something that no homeowner plans on, but life circumstances change and foreclosure can seem like the only option.  But the good news is that it’s not hopeless! There are tons of options for people who are looking for solutions after defaulting on their mortgage payments. Often the best way to rescue a house in foreclosure is to sell it. MarketPro Homebuyers is always ready to make an all-cash offer for your home as-is, and close on your timeline! But homeowners facing foreclosure should investigate every option. Before you decide, here are several things that you should consider prior to selling a foreclosed house.

How Foreclosure Works

When you take a mortgage to buy a house, part of the agreement is that the bank can recover the house if you neglect monthly payments. While the details vary, foreclosure generally begins after missing a monthly payment. The intensity of the process increases as more monthly payments are missed, starting with a demand letter and moving to a notice of default after 90 days of missed payments.

After the notice of default, the homeowner usually has 90 more days to get current on the payments and reinstate the loan. The final step is the actual foreclosure where the bank takes back the house and the homeowner is forced to leave the property.

About half of states use judicial foreclosure where the lender must get permission from the court to foreclose and the other half uses “power of sale” which is usually faster and doesn’t go through the courts. The typical process averages just under two years from the first payment missed to the lender seizing the property.

Selling a Foreclosed Home After Foreclosure Began

Despite being in the foreclosure process, the homeowner still can still sell their house. This is often the most economical option and allows the homeowner to take back some of their autonomy. Getting foreclosed on can wreck your credit rating, and selling can also avoid that hit to your credit. The important part of selling a home in foreclosure is earning enough to pay everything owed, which often includes penalties and fees in addition to back payments.

When selling a home in foreclosure, it’s important to do it sooner rather than later, before excess payments, penalties, and fees can accumulate. Selling early also gives you enough time to find a buyer who is willing to pay a higher price. Prior to selling your home in foreclosure, you’ll want to communicate with your lender to better understand the timeline as well as well as the total amount you’ll need to repay.

When Time is of The Essence, Go for a Cash Sale!

If you only have a short time to sell before your lender lists your home for auction, consider selling your home for cash. An as-is, cash sale may the best deal for your home in a short amount of time. And since you don’t have to pay for repairs or renovations, you may even be able to make a small profit on a quick sale!

MarketPro Homebuyers will quickly buy your house for cash, as-is, without any closing costs, commissions, or many of the other fees associated with selling a house. We’ll even help you move!

Other Ways to Stop Foreclosure

If you aren’t sure you’re ready to sell your house – or are simply unable to do so during the foreclosure process – there are other ways to stop a foreclosure. Foreclosure proceedings are relatively common, but only a fraction of them make it to the end stage where the lender sells the property. To avoid getting foreclosed on, consider the following options:

Short Sales

A short sale means selling the house for less than what the mortgage is worth. Lenders don’t usually want to complete the foreclosure and take control of the house. A short sale won’t cover the mortgage, but a lender might agree to it as a compromise to save them time and burden. You’ll need to get your lender to agree to a short sale and find a buyer for the property at that price.

Loan Restructuring

This option can end the foreclosure process by stretching out the back payments by adding them into future payments. Depending on credit score, interest rates, and terms, the monthly payments may still end up being lower on a restructure.

Forebarance

Many lenders are willing to work with homeowners on payments. Depending on your circumstances, they may consider a temporary forbearance on loan payments while you recover financially.

Look for Money

Before the lender retakes your home, make sure you’ve sold everything you can. Prior to taking your house, they’ll make you clear out all your possessions, so you’ll want to consider selling what you don’t need before that happens. Additionally, depending on short-term rental regulations, those can be a good way to earn additional money from your house.

Find Ways to Save Money

Cutting out expensive cable plans or subscriptions services might be a small price to pay to avoid foreclosure. If you’ve already cut all the obvious items, it may make sense to look for harder reductions like a car payment, cell phone plan, or grocery bill.

Foreclosure is a worst-case scenario for many homeowners. However, even homeowners in foreclosure have options prior to their house being seized by the lender. If possible, the best option is selling the house for enough to pay off the mortgage and all outstanding payments and fees. With this route, it’s best to hire a professional agent, or quickly sell for cash. There are other ways to stop a foreclosure and you’ll have to consider what is best for your situation. Foreclosure is never desired, but with the proper action a homeowner can still recover to keep their house or sell it for a gain.

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