One of the most effective means of avoiding foreclosure is to simply sell a home before a foreclosure sale occurs. While this is not the desired option for homeowners who wish to keep their homes, selling a home before foreclosure is a good option in certain circumstances.
Selling a Home v. Defending Against a Foreclosure
The decision to sell a home, rather than defend against a foreclosure, is more often a financial decision than a legal one. The critical factor is generally whether the homeowner has the income to sustain a loan modification or other means of paying the mortgage debt. If the homeowner, even under the best circumstances, is no longer able to afford the home, selling the property is worth considering.
A critical factor in this decision is whether the homeowner has equity in the property. Equity is the owner’s value in the property: the market value of the home less all owed money, including mortgages, home equity loans, and any liens on the property. If a homeowner owes more than the home is worth (commonly known as being underwater), a sale of the home becomes more difficult.
How to Sell A Home Before Foreclosure
A homeowner can sell their home anytime prior to a foreclosure sale. Under most mortgage agreements, a lender is entitled to collect all legal fees and expenses that accrue in the foreclosure process, so a homeowner should keep this in mind, as a delay in selling can cut into the homeowner’s net payoff from the sale.
The ease of selling a home before foreclosure often depends upon whether a foreclosure sale is imminent. If no foreclosure sale is upcoming, a homeowner can simply list their home for sale, pay off the mortgage, and be done with the matter. A homeowner in such a case should strongly consider using a reputable real estate agent and closing attorney, and ensure they understand exactly what their payoff will be from the sale.
When to Speak with An Attorney
If a foreclosure sale is imminent, a homeowner needs to speak with an attorney. In some cases, an attorney may be able to delay a foreclosure sale and provide the homeowner with the time needed to complete the sale, either through negotiations with the lender or a court action.
The success of a lawyer in stopping a foreclosure sale often depends upon the likelihood of the homeowner selling the property. A court will be more inclined to delay a foreclosure sale if the homeowner has taken firm steps towards selling the home, such as hiring a real estate agent and listing the property for sale.
Selling a home to avoid foreclosure is a good option for some homeowners facing foreclosure. If you need assistance with such a matter, contact me for a consultation.