Sell Your Home

When faced with the possibility of foreclosure, selling your house may be an option, but depending on your circumstances will be handled in different ways. If the market value of your home is above what you owe on your mortgage, then selling may be your best option.  If you owe more than the market value, but have assets that can be liquidated (for example, bonds or IRAs) then using the money from these assets to “cure the deficiency” at closing may be an option in order to sell.  Liquidating assets can have tax consequences, please discuss with a tax or finance professional.  Using this option may be better though than the credit damage that will result from a “short sale” or foreclosure.

Short Sale

A “short sale” is when the seller owes more money on the loan (and any other liens) than what they would receive by selling at the current market value AND the seller is not able to bring money to the closing like mentioned in the example above.  People sometimes ask how they can avoid a short sale.  Keep in mind that a short sale occurs before a property has been foreclosed and is initiated at the request of the owner.  A short sale may be preferable to a foreclosure because it will not damage your credit as much, there won’t be a record of foreclosure, and there won’t be a record of eviction.  Short sale is not a simple process and is one in which you should seek professional help.  Among other factors, you must prove you have a hardship and the lender must approve the short sale.  Keep in mind that lenders are NOT required to accept a short sale but some are willing to do so.  In a short sale, the bank will be taking a loss on the loan which, in simple terms, is not good for their business. Also keep in mind that you may still be liable for any difference between the selling price and what you owe.

Remember, the time to consider these options is before your home has been foreclosed – you must act quickly!  If you have any questions or need help understanding the options available to you, please don’t hesitate to contact us.

All articles about foreclosure on this blog relate to foreclosure in the State of Texas.  State laws determine how foreclosures will proceed and the laws may vary from state to state.  It is highly recommended that you consult with an attorney regarding the legal consequences of foreclosure as well as seek the advice of financial and tax professionals.  You can also talk to foreclosure avoidance counseling agencies approved by HUD completely free of charge.