Received a notice of foreclosure? The first thing you’ll want to do is seek legal help (the author is not a lawyer and this isn’t legal advice). However, this article is intended to provide an option and potential solution that exists in most states.
Just because you’ve received a foreclosure notice doesn’t mean your home will definitely be sold at a sheriff’s sale. Your lender, tax authority or other lien holder wants to be paid, and resorted to the foreclosure basis. If your home has enough equity to pay back all the lien holder’s, there is an option: sell your home before the sheriff does – a quick house sale.
When you sell your home, anyone with a lien against your property such as a mortgage company or tax authority will be paid at closing from available closing funds. After all parties are paid, and closing fees paid, any money leftover will go to you. If the foreclosure sale doesn’t yield a high enough price to pay your creditors, they could still file a judgment against you to collect unpaid monies, but check your local laws. You should let your lender know when closing is so they can provide the payoff balance. A quick house sale could help payback your debtors, and generate some cash for you, if you have equity in your house.
Depending how much equity you have, you may be able to use proceeds from closing towards another purchase or as prepaid rent for a new home. By selling a property through a quick house sale prior to a sheriff’s sale in foreclosure, you’ll have more control over the net proceeds you receive and sale timing.
A lawyer can provide legal advice for how much time you have to try selling a house in your area.
Timing
You have right up until the home is sold at auction to close on a quick house sale. You could close a few hours prior to an auction. You could wait for the sheriff to sell the home, but you wouldn’t know how much it will sell for, and there are added fees from the sheriff sale. Come to an agreement as early as possible, and work with your lender; they’ll be anxious for a quick resolution as much as you.
Options for a Quick House Sale
- Find a local real estate investor that’s willing to purchase the house; you may be able to live in the house for a while after closing if you negotiate that
- List with a local real estate agent and advertise you’re a “motivated seller”; ask for by clicking these links if you’re in Pennsylvania or New York
- If you have friends or family that have a keen interest in the house, ask if they’d be willing to purchase it; you may be able to negotiate a rental agreement to keep the property in the family; someone with good credit may be able to purchase the home with a mortgage
- Short Sale – it might not be too late to negotiate a sale for less money that you owe on your mortgage, but will need to be negotiated with your lawyer and lender; foreclosures are expensive for lenders too, and they’ll be anxious to avoid them; however, a short sale usually isn’t a quick house sale
- Ask us for help! We’ll give a confidential cash offer with quick closing, or list your home for free. Get in touch by letting us know what’s going on and we’ll give you a confidential consultation, for free
Right of Redemption
In some states, there is a post-foreclosure right of redemption. This allows homeowner’s short period of time following a foreclosure sale to redeem their house back. PA & NY do not have post-foreclosure rights of redemption, according to this website.
Other Options
You can always ask friends & family for money, cash in other assets to catch-up on debt payments, or even restructure your loan. Whatever you do, we suggest moving quickly to maximize your chances of success.