Can I Sell My Home If It’s In Foreclosure in NY?

Foreclosure occurs when a homeowner is unable to make their mortgage payments on time and has no way to catch up on the missed payments. Because a mortgage is a legal agreement between you and your lender, once you’ve defaulted on the loan, the lender can auction off the property to cover any outstanding debts, leaving you homeless and with terrible credit. Facing foreclosure can be overwhelming, but you may still have options to sell your home and protect your financial future. Whether you’re in pre-foreclosure or your lender has already initiated proceedings, selling your home could help you avoid further credit damage and financial strain. Our team is here to guide you through the process and help you make the best decision for your situation.

No one wants to receive a notice of foreclosure and yet, in a nationwide study, nearly 1 million Americans were afraid of losing their homes (U.S. Census Bureau Household Pulse Survey, fielded from July 27 to Aug. 8, 2022). Foreclosure can occur from a number of reasons, including:

• Job loss and loss of income
• Divorce or death of a spouse or partner
• Mounting debt, including medical and credit cards
• Moving without being able to sell the home
• Natural disaster

Buffalo Brick & Mortar LLC is a local company operating in NY that has built their business by buying distressed houses and properties in the area for cash. They promise competitive cash offers without the hassle of dealing with real estate agents, title companies, traditional bank financing, and more!

What is Foreclosure?

Let’s say you or your spouse recently lost your job. You still have the same bills to pay but unfortunately you don’t have the money to cover your expenses, including your mortgage payment. What happens now? Even if you find another job the amount of debt you’ve accrued during that time might be too large for you to pay off in a reasonable amount of time. When this happens, the bank starts the process of foreclosure. Foreclosure is the legal process that occurs when a homeowner falls behind on mortgage payments, and the lender takes action to repossess the property. There are typically several stages of foreclosure, and depending on where you are in the process, selling your home may still be a viable solution.

How Long Do You Have To Get Out of Your House After Foreclosure?

The steps for foreclosure in most states are missed payments, public notice, foreclosure, auction, and eviction, but the amount of time for each step varies based on state. You could have anywhere from 120 days to nine months before the bank can foreclose using either a judicial or non-judicial foreclosure. During this time, your lender will reach out to you by phone, mail, and email to let you know about the process.

n You Sell a Home in Foreclosure?

Yes, in many cases, you can sell your home even if it’s in foreclosure. However, the process differs from a traditional home sale because time constraints and lender involvement must be considered. Here’s what you need to know:

• Pre-Foreclosure Sales – If you’ve missed a few payments but the bank hasn’t scheduled an auction yet, you may still have time to sell your home traditionally and pay off the outstanding mortgage balance.
• Short Sales – If your home is worth less than what you owe, your lender may approve a short sale, allowing you to sell for less than the mortgage balance and avoid foreclosure.
• Selling Before Auction – If the home is already in foreclosure but hasn’t been sold at auction yet, there’s still an opportunity to find a buyer and work with your lender to close the sale.

The Different Types of Foreclosure

There are two different types of foreclosure you may experience: nonjudicial foreclosure or judicial foreclosure.

How to Sell Your House Before Foreclosure in NY

Let’s break down a few ways you can sell your house, depending on your time frame and situation:

Hire A Real Estate Agent

The first step most Americans think of when selling a house or property is to reach out to a local real estate agent. But there are pros and cons to this option when you are in a difficult situation such as foreclosure. Sure, a good real estate agent can list your property on the MLS and help you get it ready for open houses and daily showings, but they do all of this work so that at the end of the closing process a large chunk of your money from the sale of your house goes to them in the form of the agent’s commission. When you’re already suffering from a mountain of debt and need every penny to pay back your lender, a commission of 3% to 6% of your final sale price may be too hefty an amount to give up.

Plus, there’s the additional fear of not knowing when your house will actually close. Realtors may promise a lot, but at the end of the day you’ll still need to find the right buyer and wait 30+ days for a traditional close. For some homeowners who are facing auction and eviction, even waiting one month might be too long.

Short Sale

If you owe more on your house than it’s worth, your realtor may require what is called a short sale. A short sale is necessary when you owe more on your house than the property is currently worth. For example:  if you owe $200,000 on your house but in the current market it’s only worth $150,000, you must deal with a short sale. Though it may seem like a good option, it won’t be fast or easy.

To start off, you’ll first need to get your lender’s approval. To qualify for a short sale, you must prove financial hardship using documentation such as W-2s, medical bills, etc. For a situation such as loss of income, the lender will require that you prove that the loss of income is long-term and unlikely to turn around in your favor. If the lender approves the short sale, you will need to find a real estate agent and attorney that specialize in short sales, and they will still charge you the same amount as they would if you were selling your house with a traditional home sale.

If your foreclosure hasn’t dragged on for too long and you’ve maintained contact with your lender, it’s likely that they will approve the short sale. This allows them to avoid the time and expense of trying to foreclose on your property, while still recouping some of the loss from the missed mortgage payments. But for the regular American homeowner, the short sale will follow them for the next 5 to 7 years. 

You may have sold the house and been able to pay off some of your debt, but the short sale can damage your credit the same as if you had declared bankruptcy. The credit unions include the delinquency on your mortgage(s) to your lenders and the short sale on their records, making it nearly impossible for previous homeowners to get a credit card, buy a car, or move into a new house or property for the same amount of time as a bankruptcy.

Sell Your House AS-IS to A Cash Buyer

If you’re under a strict time restraint to sell your house before a foreclosure progresses to auction and eviction, you do have options! You can try to sell your property with a real estate agent, work with your lender to complete a short sale, or – best of all – turn to a trusted and reliable cash investor to help you with your situation.

Some of the benefits of selling to a direct cash investor include:

• A quick and pain-free closing process.
• Avoid paying any commissions or fees.
• You won’t have to worry about marketing your house and waiting for a buyer.
• No need to clean-up or complete any repairs!

When you sell your home as-is to a direct cash buyer, you not only can avoid losing your home to an auction, but you also may be able to sell the property for enough money to get out of financial debt. Moving on with your life without the burden of a monthly mortgage payment and debt hanging over your head is one of the best gifts you can give yourself!

Steps to Selling a Home in Foreclosure

1. Understand Your Lender’s Timeline

The foreclosure process varies by state and lender. Understanding deadlines and key milestones will help you act quickly to sell before the property is repossessed.

2. Determine the Property’s Value

A professional market analysis or appraisal will help you understand your home’s worth. If the value is higher than your mortgage balance, selling may allow you to pay off your debt and keep any remaining equity.

3. Communicate with Your Lender

Lenders may be willing to work with you if they know you’re actively trying to sell the property. Keeping open lines of communication can prevent unnecessary legal actions and may allow for extensions or alternative solutions.

4. List the Property for Sale

A real estate professional experienced in foreclosure sales can help you market your home quickly. Depending on your timeline, you might choose to sell through a traditional listing, a cash sale, or an investor purchase.

5. Negotiate Offers and Close the Sale

Once you receive an offer, it’s essential to act quickly. Your lender may need to approve the sale, particularly if the offer is less than the remaining mortgage balance (short sale). Closing efficiently can help you avoid foreclosure and minimize financial consequences.

Avoiding Common Pitfalls

When selling a home in foreclosure, there are certain mistakes that can delay or complicate the process. Here’s what to avoid:

• Waiting Too Long – The sooner you act, the more options you have. Waiting too long could lead to losing the ability to sell before foreclosure is finalized.
• Ignoring Lender Communication – Staying in contact with your lender can help prevent further legal action and allow for negotiation.
• Overpricing the Home – Pricing your home too high can scare off buyers. A real estate agent can help you set a competitive price to sell quickly.
• Failing to Consider a Short Sale – If your home is worth less than your mortgage balance, a short sale could be a viable option. Failing to explore this route may lead to foreclosure.

Alternatives to Selling

If selling your home isn’t the best option for you, there are other ways to avoid foreclosure, such as:

• Loan Modification – Some lenders will adjust your loan terms to make payments more manageable.
• Forbearance Agreement – Temporarily pausing or reducing payments may help you catch up on missed payments.
• Deed in Lieu of Foreclosure – You may be able to transfer ownership of the property to your lender to avoid a foreclosure on your credit record.
• Refinancing – If you qualify, refinancing your mortgage could help you secure lower payments and prevent foreclosure.

Can You Stop Foreclosure Once it Starts?

Sell Your House Fast to a Cash Buyer 

Are you ready to sell your house but don’t have the time to wait 30+ days for a traditional close? Does a short sale seem like a fast way to ruin your credit? Prefer to pay off all your debt at once and get the bank off your back fast? A direct home buyer and cash investor might be exactly the solution you’ve been searching for! When you work with a trusted and reliable investor with a great reputation in your area, you’ll find a helpful company with cash on hand that is ready to purchase your home from your as-is. With a cash buyer, you can skip the lengthy process of foreclosure, eviction, and auction within a matter of days, and save your credit as well!

You may not get full market value for your house or property when you sell to a trusted cash investor, but the timeliness of a fast closing, and the lack of fees, required inspections, and commissions often balance this out at close. Best of all, because an investor can close fast, you can often close before the bank is able to auction off your property! This means you can sell the property for the amount that benefits you versus the pennies to the dollar price the bank will often try to sell your house for just to get it off the books.