Looking for a new house could be a taxing job and with a fluctuating real estate market, selling your home fast is equally challenging. Foreclosures have been consistent in the real estate market. Since August 2020, a massive 5,599 US properties were listed under foreclosure in the states of Florida, New York, Indiana, Mississippi, and New Jersey.
The question may still linger amongst lenders and aspiring purchasers, can you sell your home while in active foreclosure? Or is it a good idea to buy a house during an active foreclosure?
Yes, it is possible to sell your house while in active foreclosure. Real estate agents have drawn a fine line on what approach works best when buying a foreclosed home. It is possible to sell your home before the foreclosure is finalized or before the home is sold at an auction because once the bank or lender claims the property, you will no longer have the power to sell the house.
Many people here and there, either think it’s a loophole out or a risky gamble worth a second thought. With a global pandemic dwindling the real estate market in the US, there is still some progress when it comes to aspiring homeowners purchasing foreclosed properties.
Things to Remember When Selling Your House Under Foreclosure
Since the real estate market often changes, a lot of potential homeowners, especially those dabbling in buying a house for the first time often don’t know about it. Foreclosed properties or homes on the way to foreclosure can still reap a few benefits if you loop a buyer into the equation.
Let’s take a deep dive and see the possibilities and probabilities to consider when you decide to sell your house before fully surrendering it to foreclosure.
It is still possible to walk away with some cash
Since some homeowners fail to make mortgage payments to lenders on time, the tendency to let go of the home becomes an active struggle. Thus, the owners attempt to rescue the house by trying to sell it instead of putting it up for auction and paying the lender all that is owed. This includes back payments and penalties.
But if your house is in prime condition and bargain-priced that goes well below the market, then there is a chance to sell your home for a higher price than your mortgage balance and expenses. Keep in mind, this is mostly a viable option if you have enough equity in your house.
Finding a serious buyer could bring you a last-minute win
In the process of watching your home fall under foreclosure properties, there is still a way out of surrendering it to the lender once and for all. If you’re able to sell it smart and find a buyer to purchase your house during the foreclosure period, then you’ve scored yourself one last shot from dampening your credit.
Find a realtor with solid experience in short sales
Your best bet in finding an interested buyer last minute is to work with a realtor who is an expert on short sales. However, this will require the lender or your bank’s cooperation wherein the experienced realtor will be able to advocate on your behalf to accept a specific payoff less than your mortgage’s balance to pay off an agreed amount.
Although this is rare and depending on your bank’s policies, some banks allow this arrangement to stay away from additional foreclosure expenses. This includes preparing the house to go on sale and carrying the full load of the house until a final sale is made.
When you plan to sell your home this way, it is best to approach this step with caution and to consult with your realtor. Since a bad economy brought about by the pandemic could modify the possibility of this option, making a short sale should be approached with a strategy only a realtor or an experienced agent could help you with.
Your home’s location could play a role in postponing the public auction
In the US, delaying the process of placing your home under foreclosure is technically doable. Although, the location of your property can make a difference in postponing the auction and have enough time to sell your house to a serious buyer.
Know the difference between a sheriff’s sale and a trustee’s sale. A sheriff sale takes place in judicial states like New Jersey, wherein you will be able to file a motion for postponement of the property for sale. This process usually takes a minimum of two years.
A trustee’s sale will be initialized with a notice that will be recorded in the property’s county. This is usually common in states like Arizona or Texas, which will only take a few months.
Latest Real Estate Market Trends on Foreclosure Properties in the US
To get a better grasp of the real estate trends regarding foreclosed homes, here are a few market trends and facts on what the market is like during a global pandemic.
Foreclosures in 2020 went up by 20% since September
Despite the global pandemic’s ability to slow down the world economy and change up the real estate market, a whopping 11,673 US properties were found under foreclosure filings. This figure also includes those who filed with default notices, scheduled auctions, and bank repossessions just a month later.
More than three US states have increased foreclosure rates
As of August 2020, some US states have incurred a bunch of foreclosure requests. In South Carolina, one in every 6,798 units were filed for foreclosure, whereas one in every 7,338 homes were on the way to a public auction in Florida. Iowa projected one home in every 7,924 houses, while Maryland had one house in every 8,435 units filed under active foreclosure.
Bank repossessions are down by 22%
In contrast to the rates in 2019, bank repossessions and foreclosures in the US have been down by 22% from the second quarter of 2020. The overall annual rate is also down by 82% from 2019. This is by far the lowest since ATTOM Data Solutions started tracking in 2005.
Take it or Leave it
The real estate market has been widely affected by the COVID pandemic, and as difficult as it is to accept, foreclosure rates are soaring. But if you’re in a position to sell your home and have good equity, selling is a good option to consider to avoid deeper debt.
Finding a good agent who knows the ins and outs of your neighborhood’s real estate market, as well as the experience of short sales, could make a huge difference in getting your home sold to an interested buyer.
At the same time, this could help you save whatever is left of your good credit in a particularly difficult global economic state.