Can You Sell a House in Foreclosure?

Last year, over 300,000 US homes went into foreclosure. While this represents only 0.36% of US homes, it’s still a harsh reality that may be more common than you realize. 

If your home is in foreclosure, you could be facing a serious blow to your credit history. In addition to the financial burden you’re facing that led to foreclosure, you’re likely to have a difficult time securing a loan for your next home.

Can you sell a house in foreclosure? The answer is yes, and it’s often the right choice for homeowners who can’t keep up with current mortgage prices.

Read on to learn everything you need to know about selling a foreclosure property.

By HomeLight

When Does Foreclosure Start?

Homeowners risk foreclosure if they fall behind on mortgage payments. How many mortgage payments can you miss before your lender threatens foreclosure?

This answer varies based on state laws and individual loan policies. For example, some homeowners may face foreclosure in as little as three months of missed payments. Others may not face foreclosure until their sixth unpaid mortgage payment in a row.

Before a lender officially puts your home into foreclosure, they are required to give notice. If you receive a Demand or Notice to Accelerate, don’t take it lightly. These letters will tell you how long you have to catch up on missed payments and late fees before the lender puts your home into foreclosure, and this period of time is often only 30 days.

How Long Do Foreclosures Take?

You can halt foreclosure by squaring up with your mortgage company or by finding the right buyer before the bank steps in. In some states, you may have until the foreclosure sale is finalized to catch up on your payments. 

What if you don’t take steps to halt a foreclosure? How long will it take between foreclosure begins and the actual sale of the home? once again, the answer varies. It can take anywhere from a few months to a few years to sell a home in foreclosure. 

Current homeowners won’t need to vacate the premises until there is a transfer of title to a new owner. However, some lenders will transfer the title to the bank before a sale goes through. In other words, it’s not always safe to assume that you can stay put until the home sells. 

Why You Should Consider Selling in Pre-Foreclosure

Pre-foreclosure refers to the period of time when you’re starting to miss mortgage payments but your home is not yet in foreclosure. In other words, you know that trouble is coming but it hasn’t arrived in full. 

Many homeowners go into denial during this time and don’t want to think about selling. If you only missed one payment due to a temporary shortage of cash, you may not need to think about selling yet. However, if you know that you won’t have the cash to pay off all those missed payments any time soon, it’s time to think about selling.

Selling in pre-foreclosure gives you more options. You’ll have time to:

  • Assess the current market value of the home
  • Make minor repairs and improvements to increase the property’s salability
  • Partner with a trusted real estate agent in your community
  • List your home for maximum visibility
  • Show your home to interested buyers and potentially accept a fair market offer

By getting your home’s full value out of a pre-foreclosure sale, you may recoup some of your recent financial losses. Keep in mind that you’ll need to pay off your lender and your real estate agent, but because most home values appreciate with time, there’s a good chance that you stand to gain money. 

Can You Sell a House in Foreclosure Already?

What if you didn’t get your home on the market before foreclosure? Can you still sell your home before the lender does? You can, but you won’t have as many options at this phase.

If you’re trying to sell a home in foreclosure, you’re trying to sell your home fast. Speed is the primary motivator because you’re racing the clock to protect your credit history. This means that you won’t have time to make high-ROI upgrades or entertain many offers-and you’re probably going to have to set a lower asking price than market value.

One option is to look for companies like We Buy Houses Kansas City that have a quick turnaround time and pay for properties in cash, in full. Another option is to find an agent that can put your property in front of local investors or eager buyers. Either way, you’re not going to recoup the full value of your home, although the sale may still put you in the black. 

Though you might feel inclined to dodge your lender, it’s best to keep them in the loop while you’re trying to secure a sale. They may even grant you a longer grace period to secure a buyer before taking over and selling the property, themselves. After all, they’re motivated to recoup their full investment, too. 

Sell Your Home to Avoid Foreclosure

Foreclosures tend to rise and fall in waves across the country. Though we’re not looking at the worst market for foreclosures that we’ve ever seen, high-interest rates and a possible recession could increase foreclosures in the near future. If you’re worried about your upcoming mortgage payments and asking, “Can you sell a house in foreclosure?” it’s time to start thinking about finding a buyer.

Looking to tackle some DIY home improvement projects before listing your home for sale? Take a look around as we share tips, tricks, and how-to guides that will make home improvements a breeze.