Foreclosure happens when homeowners fall behind on mortgage payments with no feasible way to catch up. Since your mortgage is a binding contract between you and your lender, defaulting on the loan gives the lender the right to sell your property at auction to recover their losses, leaving you without a home and with severely damaged credit.
Nobody wants to face foreclosure, yet according to a recent study, nearly 1 million Americans feared losing their homes (U.S. Census Bureau Household Pulse Survey, fielded from July 27 to Aug. 8, 2022). Foreclosure can result from various circumstances, including:
- Job loss and reduction in income
- Divorce or death of a spouse or partner
- Overwhelming debt, including medical bills and credit cards
- Relocating without selling the home first
- Natural disaster
Sell Smart VA is a respected local business operating throughout that specializes in purchasing distressed properties for cash. We offer competitive cash deals without the complications of real estate agents, title companies, traditional bank financing, and other typical selling hassles!
What is Foreclosure?
Imagine you or your spouse recently lost your job. Your bills remain the same, but you suddenly don’t have enough money to cover expenses, including your mortgage. What happens next? Even if you find new employment quickly, the debt accumulated during that period might be too substantial to manage within a reasonable timeframe. When this occurs, your lender begins the foreclosure process.
How Long Do You Have To Get Out of Your House After Foreclosure?
The foreclosure process typically follows these steps: missed payments, public notice, foreclosure, auction, and eviction – but timing varies by state. You might have anywhere from 120 days to nine months before the bank can foreclose through either judicial or non-judicial procedures. During this period, your lender will attempt to contact you through various channels including phone, mail, and email to inform you about the process.
The Different Types of Foreclosure
There are two main types of foreclosure you may encounter: nonjudicial foreclosure or judicial foreclosure.
What Is Non-Judicial Foreclosure?
A non-judicial foreclosure is the quickest and most cost-effective way for lenders to foreclose on your property. This method doesn’t require taking you to court and can proceed according to state laws. In a non-judicial foreclosure, your lender repossesses your home to sell it and recover the outstanding debt using a “power-of-sale” clause in the deed of trust. Not all states permit this option, but when available, lenders typically prefer it to avoid court expenses.
What Is Judicial Foreclosure?
In states requiring judicial foreclosure, your lender must file a lawsuit requesting court permission to sell the home. The lender must provide you with this legal notice. Whether you contest it or not, you must respond to the notice, or the lender will automatically win the case and gain permission to put your home up for foreclosure sale. After the house sells, you’re still responsible for paying the difference between what you owe on the mortgage and the amount the house sold for.
Foreclosure auctions differ significantly from standard home sales, and properties rarely sell for market value. This means even if your house is in excellent condition and worth substantially more than your remaining mortgage, you could still end up owing tens or even hundreds of thousands of dollars for a house you no longer own! This is called a deficiency judgment. It’s a costly and lengthy process for lenders pursuing debt recovery, which explains why most prefer non-judicial foreclosure when possible.
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How to Sell Your House Before Foreclosure in
Let’s examine several ways you can sell your house, depending on your timeframe and specific situation:
Hire A Real Estate Agent
When most Americans think about selling property, they immediately consider contacting a local real estate agent. However, this approach has both advantages and disadvantages when facing foreclosure. While a competent agent can list your property on the MLS and prepare it for open houses and showings, they perform these services expecting a substantial commission from your sale proceeds. When you’re already struggling with mounting debt and need every dollar to repay your lender, a commission of 3% to 6% of your final sale price might be too much to sacrifice.
Additionally, there’s the uncertainty of when your house will actually close. Realtors may make promises, but ultimately you still need to find the right buyer and wait 30+ days for a traditional closing. For homeowners facing imminent auction and eviction, even a one-month wait might be far too long.
Short Sale
If your mortgage balance exceeds your home’s value, your realtor may recommend a short sale. This option becomes necessary when you owe more than your property is currently worth. For example: if you owe $200,000 on your house but in today’s market it’s only valued at $150,000, you’ll need to pursue a short sale. While this might seem like a good solution, it’s neither quick nor simple.
First, you must obtain your lender’s approval. To qualify for a short sale, you need to demonstrate financial hardship with documentation like W-2s, medical bills, etc. For situations like income loss, the lender will require proof that the financial setback is long-term with little chance of improvement. If the lender approves the short sale, you’ll need to find a real estate agent and attorney who specialize in short sales, and they’ll still charge their standard fees, just as with a traditional home sale.
If your foreclosure hasn’t progressed too far and you’ve maintained communication with your lender, they’ll likely approve the short sale. This helps them avoid the time and expense of foreclosure while still recovering some of their loss from missed mortgage payments. However, for homeowners, the short sale will impact your financial life for the next 5 to 7 years.
While you may have sold the house and paid off some debt, a short sale can damage your credit score similar to declaring bankruptcy. Credit bureaus record both the mortgage delinquencies and the short sale itself, making it extremely difficult for former homeowners to obtain credit cards, purchase vehicles, or secure new housing for the same duration as a bankruptcy.
Sell Your House AS-IS to A Cash Buyer
If you’re facing a tight deadline to sell your home before foreclosure advances to auction and eviction, you do have options! You could attempt selling with a real estate agent, work with your lender on a short sale, or – most advantageously – partner with a reputable cash investor who specializes in helping homeowners in your situation.
Some key benefits of selling to a direct cash investor include:
- A swift and stress-free closing process.
- No commissions or hidden fees to pay.
- No marketing concerns or waiting for qualified buyers.
- Zero cleanup or repairs needed – we buy truly as-is!
When selling your home as-is to a direct cash buyer, you not only avoid losing your property to auction, but you may also secure enough money to clear your financial obligations. Moving forward with your life without the burden of monthly mortgage payments and overwhelming debt is one of the greatest gifts you can give yourself!
Can You Stop Foreclosure Once it Starts?
Pay Off Your Loan & Fees
You’re facing a challenging financial situation. Your debt continues to grow while your income remains static. It’s time to take decisive action and explore ways to rapidly reduce your debt. Do you have assets you could sell? Perhaps friends or family members who might provide a gift or loan until your finances stabilize? If you’re committed to paying down debt and preventing foreclosure, consulting a financial professional to restructure your budget may be beneficial. Consider using one or a combination of these approaches to tackle your mounting debt and regain a stress-free life.
Declare Bankruptcy
As a last resort, bankruptcy might help halt your home foreclosure, but it comes with significant consequences. The bankruptcy process is complex and requires an attorney specializing in bankruptcy law. If the court approves your petition, you’ll enter a government-approved credit counseling program, and the bankruptcy will remain on your credit report for 7 years. This affects every aspect of your financial life, including vehicle purchases, credit card applications, bank accounts, and can even disqualify you from future rental agreements.
The Homeowner Affordability and Stability Plan (HASP)
If your debt exceeds your income, you might qualify for the Homeowner Affordability & Stability Plan (HASP). HASP is a loan modification program designed for borrowers facing foreclosure due to insufficient income. This government initiative helps American homeowners restructure their monthly payments to accommodate limited budgets. Check your eligibility by applying for the program here.
Sell Your House Fast to a Cash Buyer
Are you ready to sell your house but can’t wait 30+ days for a traditional closing? Does a short sale seem like a fast track to credit damage? Would you prefer to eliminate all your debt immediately and get the bank off your back quickly? A direct home buyer and cash investor might be exactly the solution you need! When working with a trusted and established investor with a solid reputation in your area, you’ll find a helpful company with ready cash prepared to purchase your home as-is. With a cash buyer, you can bypass the drawn-out foreclosure process, avoid eviction and auction, close within days, and protect your credit rating!
While you might not receive full market value when selling to a cash investor, the benefits of a rapid closing and the absence of fees, inspections, and commissions often balance out at closing. Most importantly, because an investor can close quickly, you can often finalize the sale before the bank auctions your property! This means selling the property at a price that benefits you, rather than accepting the pennies-on-the-dollar price banks typically offer just to clear their books.
We Buy Houses in Foreclosure & Pre-foreclosure–
Get Your Offer Today!
Does the prospect of finally walking away from your property without the dark cloud of foreclosure hanging over your head appeal to you? Contact a professional at Sell Smart VA today to learn more and receive a fair cash offer for your property.