Getting a foreclosure notice is one of the most stressful things to happen to any homeowner. If you’re still in the pre-foreclosure stage, though, you do have options. One of these is selling your house, whether to an individual buyer or a company that pays cash for homes.

Here’s what you need to know when you sell your house in pre-foreclosure.

What Is Pre-Foreclosure?

Pre-foreclosure is the stage right before your home goes into foreclosure. In this stage, you still have the chance to work things out with your lender before they take the home. The foreclosure process varies a bit depending on your state but typically goes something like this:

1. When you miss your first mortgage payment, the clock starts ticking on the foreclosure process. 

2. After you’ve missed mortgage payments for a certain amount of months (usually three), the lender will issue a Notice of Default or Notice of Breach.

3. Next, you enter the pre-foreclosure stage. If you want to keep the house, you can pay off your missed payments or negotiate with the lender to pay back what you owe.

4. If you do nothing or can’t come to an agreement with your lender, they’ll put the property up for foreclosure auction and sell it to a third party. Foreclosure can seriously hurt your credit score and make it tough to get another loan again. It’s important to work things out, whether that’s negotiating with your lender or selling the home before things reach this point.

5. Once the lender sells the home, they may have you evicted from the property

Can You Sell Your Home Before Foreclosure?

It’s fine to sell your home in the pre-foreclosure stage, and many people do just that if they know they’ll never be able to pay the lender what they owe. However, the process goes a little differently depending on whether you have equity in the home.

If You’re Upside-Down on Your Mortgage

If your house is worth less than what you owe on your mortgage, you’ll have to offload it in a short sale. It’s called a short sale because the bid you get won’t cover what you owe on the mortgage, so you’ll be short on paying back your lender.

You’ll need to get your lender’s approval for a short sale. To do this, you’ll have to put together a financial package and request permission to sell the property for less than you owe. In the package, you might need to include a hardship letter explaining why you can no longer make your payments.

Valid reasons for not making payments include:

• You’re going through a divorce
• You lost your job
• You have unaffordable medical bills
• You were a victim of predatory lending practices

Many lenders are reluctant to approve a short sale because it means they’ll lose money. Even so, a short sale could be preferable to going through the foreclosure process and selling the home at auction.

Once the lender approves the short sale, you’re in charge of selling the home. However, unlike the normal home selling process, it’s the lender who handles negotiations and chooses an offer.

You can opt to sell pre-foreclosures with the help of a realtor if you prefer. Short sales can be complicated, so working with a realtor may be a smart choice. 

If you’d rather skip the hassle of dealing with a realtor, you could also sell your house in pre-foreclosure to a company that buys short-sale homes. Such companies, like Offer4Homes, can make you a fast offer and close on the sale in as little as two weeks.

If You Have Home Equity

If the value of your home is more than what you owe on your mortgage, you have equity in the home and can sell it in much the same way as you would any other property. You don’t need to get your bank’s permission to sell a home this way.

The selling process will follow these steps:

1. Hire a real estate agent to guide you if you’d rather not sell the house on your own. 
2. Find out how much your home is worth, and set an asking price. 
3. Make major repairs if needed. This can be tough to afford if you can’t make mortgage payments, but doing so can increase the sale price of your home.
4. Wait for offers and pick the best one, then proceed to negotiations.
5. Let the lender know that you’ve found a buyer as soon as you can.
6. Complete the deal and transfer the home to the buyer.

Selling a home the usual way can take months, and when you’re facing foreclosure, you may not have that kind of time. Consider selling your home to a “We Buy Houses” company instead.

These companies buy homes in any condition and can make you an offer significantly faster than a financed buyer can.

Pros and Cons of Selling a Pre-Foreclosure Home

Letting go of your home is never easy, and it does come with a few perks and drawbacks to consider before you pull the trigger.

Pros:

• May spare your credit score and save you from having to file for bankruptcy
• Allows you to offload a debt you can’t pay
• If you opt for a short sale, you’ll probably pay fewer fees
• May allow you to buy a more affordable home in the future

Cons: 

• You only have a limited amount of time to sell before the home goes into foreclosure
• Finding a buyer on your own can take months (unless you sell to a company that pays cash for houses, like Offers4Homes)
• Short sales can hurt your credit score (not as much as a foreclosure, though)

Contact Offers4Homes to Sell Your Pre-Foreclosure House Fast

If your house is in pre-foreclosure, you don’t have time to wait on a realtor to track down buyers for you. So sell your house in pre-foreclosure to Offers4Homes instead! There’s no need to make costly repairs, and you could close in as little as two weeks.

Contact us to get a cash offer for your home now!