Are you in the situation where you own a Detroit MI house in foreclosure right now? Many others are going through the MI foreclosure process and want to get out from under that burdensome house. These folks are wondering if they can sell the house in foreclosure. The short answer: yes. The long answer: it is a bit more complicated, but usually you can sell your property prior to foreclosure. And almost always, the sooner you start this process, the better.
Can I Sell My House in Foreclosure in Detroit? – How it works
There are a lot of folks in Detroit who have faced foreclosure in the past year or are at least going to be facing foreclosure in the near future. Since the changes in the economy, a lot of banks have been shifting the way that they deal with foreclosures.
Remember, the bank that carries your mortgage does not really want to see your home abandoned or auctioned. The bank stands to make the most amount of money by helping you to avoid foreclosure by selling your property. However, dealing with banks during any part of the foreclosure process can be a huge pain. Over many years of working with banks to help stop the foreclosure process, along the way we have learned a few tricks that will help you.
Working With Banks During The Foreclosure Process
- Always over-communicate with the bank (but try not to be annoying). Call with updates and show them what you are trying to do to get your property sold.
- Do not miss any deadlines. If anything will be late, call with advance notice.
- Remember that bankers are people too. Do not seem overly dramatic, but explaining your situation and demonstrating your willingness to fix the problems to make it right goes a long way.
- Start keeping careful records of every conversation you have with the bank. Nothing counts unless it is in writing. Make sure to keep track of each person you speak with, what they said, and any promises made.
- Explore all your options, including short sale, loan modifications, and bankruptcy. Depending on the details of your personal situation, you may be able to dramatically slow down the foreclosure process with enough effort. Each bank has its own policies to help borrowers avoid foreclosure.
- Do not wait at all. Unfortunately, time is not on your side. The further behind you become on payments, the fewer options are available to you.
We specialize in helping homeowners in situations including foreclosure around Detroit and the whole state of MI get out of difficult situations and avoid foreclosure. In certain circumstances, we can negotiate directly with the bank to reduce the amount you owe and (sometimes) even help you walk away from your property with cash.
Now, you may have heard of a short sale, so read on to learn more about the difference between a short sale and a foreclosure in Detroit. But if you want a cash offer today, please contact us ASAP to try to avoid foreclosure in Detroit.
Short Sale vs Foreclosure – What’s the Difference in Detroit?
Whether you are a buyer or a borrower/seller, a short sale, and foreclosure each present different advantages and difficulties.
What Is A Foreclosure In Detroit, MI?
In simple terms… “A foreclosed home is one in which the owner is unable to make his mortgage loan payments and the bank repossessed the home” (source). If you stop making your house payments… your lender has the right to foreclose on your property so they can attempt to recoup their money that was lent to you.
A home is typically foreclosed on when a borrower fails to make mortgage payments. The lending institution assumes ownership and possession of the property, evicting the borrower. These properties are then sold at auction or more traditional means utilizing the service of real estate agents. A foreclosure can damage the credit rating of a borrower, and make it very difficult to obtain a mortgage for many years.
Depending on the state that you live in… foreclosure can work in different ways. Check out the foreclosure process information over here at the HUD Government website.
What Is A Short Sale?
In a short sale, the home is still owned by the borrower.
The definition of a short sale is… “A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the total amounts owed on the liens and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt” (source: Wikipedia)
In some cases, a short sale is an option agreed upon by borrowers and lenders. In a short sale, the home is sold for less than the outstanding balance of the mortgage. The unpaid balance (known as the deficiency) may or may not still be owed by the borrower.
This option typically takes some time, as a few different lending institutions may own the mortgage. All parties who have a stake in the property must agree to the terms of the sale, and a potential deal could fall through if even one lender will not agree.
Short Sale vs Foreclosure – Your Options
While both options can have ramifications, a short sale often has less of an impact on the creditworthiness of the borrower. A foreclosure could impact a borrower’s credit score by 300 or more points, where a short sale may only dent the credit score by 100 points.
Borrowers who are foreclosed on are often ineligible to purchase another home for 5-7 years with a traditional mortgage, where under certain circumstances, a short sale borrower can purchase immediately.
As many Americans struggle with an economy that has yet to completely recover from the 2008 crash, folks are having a hard time making monthly mortgage payments. Choosing between being foreclosed and initiating a short sale (or a 3rd option… selling your Detroit house fast )is an easy choice for a borrower having troubles paying their mortgage on time.
Sometimes, lenders are willing to work with borrowers to complete a short sale, to avoid the fees and time-consuming process of conducting a foreclosure.
Our suggestion is always this.
- Talk with your lender and discuss ways that they can work with you on your loan. We can help guide you in the right direction if you run into issues with your lender… just reach out to us on our Contact page and we can discuss your situation.
- Attempt a short sale or other programs your lender may have that forgives part of your loan, creates a new / more affordable monthly payment so you can get back on your feet, etc.
- If the bank will not work with you very much… your best option may be to sell your house. Work with a local real estate house buyer service like Amaze Properties LLC to sell your house fast for an all-cash offer. If you are interested we can look at your situation and make you a fair offer on your house within 24 hours. Just fill out the form on our website over here >>
- Foreclosure. The last resort is to let the house fall into foreclosure. This is the worst possible scenario. It will wreak havoc on your credit and you could still be left with money owed to the bank even after the foreclosure is finished.
By knowing your options, you may be able to dodge a significant impact on your credit score, allowing you to purchase a new home when your situation improves. A foreclosure on your credit report makes that possibility extremely difficult for 5-7 years, so if you have the opportunity, a short sale can be the better option.
Have a pending foreclosure? We would love to make you a fair all-cash offer on your house.