How Do I Sell a House in Foreclosure?
Even if you're in foreclosure, you still have the right to sell your home. Under some circumstances and with the permission of your lender, you may qualify to sell your home for less than your mortgage. These home sales, called short sales, are often preferred by mortgage lenders and can salvage your credit rating. Of course, you must receive approval from your lender to short-sell your home. However, if you obtain permission, a short sale can resolve your real estate challenges.
Consult Real Estate Professionals
To fully understand the ramifications of a short sale, you should talk to a certified public accountant and real estate attorney. Depending on current federal and state laws, your mortgage lender could still sue you for any losses they receive. You may also be taxed on the amount of your mortgage that is forgiven. In some cases, foreclosure or bankruptcy is the better option.
Getting Approval to Sell Your Home
If you want to short-sell your home, you must first obtain approval from your mortgage lender. The first step is to send a hardship letter to the lender. In this letter, you should explain why you need to short-sell your home. You probably won't qualify for a short sale without extenuating circumstances. Being unhappy with the amount of your mortgage is not enough. However, if you've recently lost your job, been diagnosed with a major illness, initiated divorce proceedings or must move to another state, you might get the necessary approval from your lender. Lenders are not legally required to approve short sells, so it's important to present a compelling reason for this favor.
Finding a Real Estate Agent
When selling your home, it's important to work with a real estate agent who is familiar with short sales. Look for a realtor who is a member of the Certified Distressed Property Experts or the National Association of Realtors Short Sale Specialists. The success of your short sale will depend on the abilities of your real estate agent. Find out how many short sales your agent has completed. Ask for references from former short-sale clients. When talking to real estate agents, beware of realtors who make promises that seem too good to be true.
Determining a Fair Price
Under the guidance of your real estate agent, you should set a price for your home. The price should be slightly above market value but still low enough to generate interest from buyers. If there is no interest in the home, the real estate agent might start dropping the price until buyers become interested in the property.
Accepting an Offer
After your real estate agent has negotiated a fair price, your mortgage lender still must approve the sale. If foreclosure is more profitable for the bank, your mortgage lender may decline the offer you receive. In addition to a signed offer to buy your house, you must also submit evidence of your financial hardship. You should also be prepared to wait to get a response from your mortgage lender. Each short sale must be carefully evaluated before it is approved.
A short sale allows you to sell your home for less than your mortgage. Before attempting a short sale, it's important to consult a tax professional and lawyer to ensure that you're making the best possible choice. When you've received lender approval for a short sale, you should also enlist the services of a good real estate agent. Once a buyer makes an offer, your mortgage lender must still approve the sale. However, if you can sell your house within a reasonable length of time, you can avoid foreclosure.
- Consult a real estate attorney and a CPA before trying to short-sell your house.
- Send a hardship letter to your mortgage lender to find out if they will consider a short sale.
- Locate a real estate agent with short sale experience who has a proven track record.
- Price your home so it will sell quickly and will satisfy your mortgage lender.