How do pre-foreclosure sales work?

On Behalf of | Apr 3, 2020 | Real Estate Transactions

If you have recently encountered difficulties keeping up with your mortgage repayments, you may feel constantly stressed about how you will get out of the situation you are in. You may also have been faced with foreclosure warnings from your bank, which will likely only add to the stress you are under.

The good news is that by taking action now, it’s likely that there are many solutions available to you. One of these options is a pre-foreclosure sale. This helps you get rid of the debt you owe by selling your home. While it does mean that you will lose your home, many people view it as preferable to foreclosure.

Understanding how pre-foreclosure sales work

Pre-foreclosures are usually the best option when you conclude that you cannot realistically keep your house. If you have resigned yourself to this, you should speak to your bank about going through a pre-foreclosure sale. The goal is to sell the property for a price that your lender agrees to. In some cases, the amount that the property is sold for is less than the total debt owed. In this case, the bank may agree to write off the remaining debt. This is known as a short sale.

Are there other alternatives?

You may be able to avoid losing your home by taking early action to speak to your lender. They may be able to grant you a forbearance so that you can catch up with your repayment obligations.

If you are worried about losing your home to foreclosure, an experienced attorney cna provide advice and guidance.