How Can I Sell My Home Before Foreclosure?

If you are reading this, then you are probably already aware of the rising rate of foreclosures across the nation. You may even be one of those who are caught between a rock and a hard place regarding your mortgage payments. You'll find many helpful sites on the internet offering advice on how to negotiate with the lender, work out some type of payment plan, avoid foreclosing and keep your property. However, all of these suggestions have one thing in common. They presume that the individual has a source of adequate funds. This strikes me as somewhat ironic in that most folks who face foreclosure do so because they have inadequate funds!

Whatever situation has caused this lack of income, the fact is that the property has become unaffordable for them. Once this fact is realized, the financial focus should shift from how to retain ownership of the unaffordable asset to how to maintain a credit score until life circumstances change for the better. It is well known that foreclosure proceedings will devastate a good credit rating and once these proceedings take place, there will be no funds and no credit. Better to at least hang on to good credit by selling the property before a foreclosure takes place. There may be offers to purchase the property at greatly reduced price once it is in pre foreclosure. Better to be proactive and list the house on the market. You will most likely take a significant loss in order to sell quickly, but at least you will have a better chance of getting a market value offer, and just listing the house may forestall proceedings by the lender. Sadly, you will loose your home, but will be able to reestablish a more affordable home with good credit.

There is one alternative to selling to a third party. Some lenders will consider taking deed in lieu of debt. This means that the title to the property will revert back to the lender in exchange for forgiveness of the debt if the value of the property is deemed sufficient to cover the debt. In a way, this is like selling the property back to the lender. However, if the debt amounts to more than the property is worth, beware! The lender may sue for the difference of the value amount, or report that amount to the IRS as taxable income for the owner. Credit scores may also be hurt by this arrangement. This should be a last resort strategy to use only when you just can't find any buyers. Remember, the sooner a house is listed, the better the chance of a satisfactory sale and of a new beginning.