The short answer is, Yes! Selling your home can prevent a foreclosure from going through. When you sell, you’re protecting your credit history and making it easier to secure a new mortgage in the future. Depending on how much you owe on your mortgage, selling the home before foreclosure may be the perfect solution.
Even in the worst case scenario, selling your home can drastically reduce the debt you owe your lender
Act before your lender does
You will need to be upward of 120 days before your lender can act against you. Depending on the action your lender has taken against you, they may have started an auction or a short sale process. If you live in a state like California that employs a one-action law, they’ll be free to sell your home out from under you if you don’t act quick enough.
However, they cannot pursue you for the difference between the sale price and the amount you owe on your mortgage. If you go into judicial foreclosure, things are different. The court will allow your lender to sell your home and come after you for the difference.
Homes in foreclosure auction generally go for much less than they’re worth. Starting the sale process as soon as you receive your foreclosure notice can give you time to find a buyer who is willing to pay the most.
If you decide to sell, you should commit to that decision from the beginning.
If selling is your last resort, make sure you aren’t wasting time.
Avoid traditional sale methods
Up until the foreclosure is finalized, you’re able to sell your home. The traditional way to sell a home involves a real estate agent, and this is problematic for several reasons.
- A real estate agent will have to list and advertise your home.
- An agent will take a large commission out of the sale price.
- You may not able to afford that commission, especially if your home sells for less than what you owe.
- Selling with a real estate agent typically takes an extended amount of time. If the housing market isn’t thriving in your area, you're in trouble.
- You may not find suitable buyer and complete the closing process before your foreclosure finishes making Short sales are your best option.
Don’t fall victim to Foreclosure Investment Scams
There are some private investors that advertise they’re available to purchase homes in foreclosure. Some of them may even claim that they’ll allow you to live there.
Basically, these investors can become your landlord, and your rent will probably be higher than the mortgage you couldn’t afford in the first place. From there, these investors can legally evict you from the property, as they are now the owners.
Some investors will provide you with bottom-of-the-barrel offers, assuming you’ll take these staggeringly low estimates because of your dire situation. You’ll sell your home for substantially less than what you owe, and still be responsible for a huge debt with your lender.
Make sure you investigate potential investors before you sign anything!
How much can I sell my Home for before a Foreclosure?
You can sell your home for as much as anyone is willing to pay for it. This is great news if you don’t owe very much on your defaulted mortgage. If you owe $40,000 to your lender, and your home is valued at $300,000, the difference belongs to you.
You’re only responsible for paying your lender the full amount you owe, as well as any interest that applies to the loan.
You may not be able to wait for a buyer who is prepared to offer $300,000 in cash before your foreclosure is finalized. In this scenario, it may be better to sell your home for a substantially lower price.
Lowering your price makes your home attractive to professional home buyers or property flippers. They’re getting your property for a great deal, and they’ll be able to spend the difference on improvements that will increase its value.
Professional Home Buyers won’t wait around – they’ll jump on the opportunity to purchase your home the moment it becomes available. Since they pay cash, you’ll be able to pay off your lender before the foreclosure and use any profits to set yourself up in a new living situation.
Can I sell my home for less than I owe?
If you owe more than your home can be sold for, the situation becomes a lot different.
It still may be worth selling, but you won’t profit much. If you owe $200,000 on a home that’s depreciated in value by $50,000, you’ll have a difficult time short selling your home.
Even then, you’re still out a significant amount of money.
If you plan on going the Short-Sale route, sell the foreclosure property for as much as you can get, and hand the money over to your lender. You won’t get anything out of the process, but your debt will be drastically reduced.
Find an honest Investor
When you’re looking to avoid foreclosure, in most cases the best option is to find a reputable investor. If an investor is making you promises that are too good to be true however, they probably are. Since time is of the essence, you may not be able to thoroughly scour local investors and vet them for trustworthiness.
At SoCal Home Buyers, we can make things easy for you so you don't have to. The sooner your foreclosure is put to rest, the sooner you can get on with your life and be free from all of that stress.
We’d be delighted to provide you with a fair cash offer for your home, allowing you to avoid adding a foreclosure to your credit history!
Simply, submit your contact information and property address, and we’ll have one of our awesome team members contact you about your home immediately. You deserve the best of service in your time of need and we would love for the opportunity to do that for you!
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