With the expiration of CARES Act, the number of evictions will quickly rise. Can you sell a home in foreclosure to get out of debt, or is this a waste of time?
Foreclosure happens when a homeowner defaults on the loan. It is a long and dreadful process that is the biggest nightmare of all people owning a home in Milwaukee. If you miss on four payments, the state will issue you a notice of default. This is the beginning of the foreclosure process, which lasts six months or even longer than a year. Once this happens, many people don’t realize that they can sell a home in foreclosure to free themselves from debt. How does this work?
In short, you can sell a home in foreclosure until the moment it is sold at auction. By selling it, you can get the money and pay off your debt, including all the penalties and back payments. In some states, you are even allowed a ‘statutory right of redemption’, or a take-back period that comes after the foreclosure. This period can last anywhere from 30 days to two years, depending on your state and occasion. During this time, you can even repurchase your home from the bank if you repay them everything.
But what if this isn’t an option for you? Can you sell a home in foreclosure and what can you do to get rid of such a burden? Here are a few solutions.
Why Would You Want to Sell a Home in Foreclosure?
Perhaps you wonder why should you sell a foreclosed home. You’ll lose your house none the less. Well, first and foremost, if you sell it instead of allowing the bank to get it, you will save your credit score. A foreclosure has a negative impact on your credit score that lasts seven years. This lowers your chances of buying a new house, as your chances of getting a new mortgage are very low during that time frame. Also, if your debt is less than your house is worth, you might even end up profiting a little bit. And, finally, you’ll be able to get out of this process with at least a bit of dignity. It’s always better to stay in charge than just to let the bank take what you owe.
How to Sell a Home in Foreclosure?
Until the moment your house is sold at an auction, it’s considered to be in ‘pre-foreclosure’. This is the period when you can try to solve everything with the lender. Selling a home is the last resort, but it’s usually the only one that will be effective. When you do so, you can repay everything you owe, including all the penalties and fees, and keep your credit score intact.
If you do decide to sell, you should let your lender know that you plan on making a sale so you can pay off the mortgage. On many occasions, lenders will agree to postpone the auction and give you a chance to find the right buyer. Of course, the sooner you decide to sell it, the more time you’ll have to complete everything and maybe even get the best price possible. Ensure your lender lets you know how much time you have left. This usually depends on your state.
Below are some ways you can sell a home in foreclosure, and pros and cons of it.
List with an Agent
If you happen to have a plenty of time on your hands and are ready to risk it, you can contact a local real estate agent who might be able to help you. This method might get you enough profit to leave you with a small income. However, in a moment when time is everything, you are risking much by listing your property on MLS. There is no guarantee the buyer will come on time – in fact, there is no guarantee a buyer will appear, at all. While working with an agent is a great choice in many occasions, this probably isn’t it.
Sell to a Direct Buyer
Maybe the best option you have is to sell to a reliable direct buyer in Milwaukee. While direct buyers won’t pay you as much as traditional buyers, they are a certain option. In fact, some might even close the sale in just seven days. This saves you plenty of stress. A lot of direct buyers will even agree to pay off your mortgage, so you don’t have to mess around with all the paperwork and hearings. Not to mention, they will pay in cash, so you don’t have to wait for banks to approve the payment, and there are no chances of the sale falling through. And all of that is free of commissions!
A short sale is a desperate action for both the homeowner and the lender. Believe it or not, the lender doesn’t want to foreclose your home. This can lead to them losing a lot of profit, which is not something a bank wants. Because of that they can agree to a short sale, which is, in fact, a quick sale of your home where you get less than you owed. Keep in mind that once the short sale is done, you’ll have to repay what remains of the debt from your own pocket. While this isn’t profitable, it will save your credit score from dropping, and you’ll still have a better reputation than if the house was foreclosed on.