Can I sell my home while in foreclosure?

Dec 30, 2019 | New Jersey Foreclosure Defense, Real Estate Law, Sheriff Sale

Can I sell my home while in foreclosure?

Our law firm represents many sellers in the foreclosure process.  At times we also work to sell properties while our clients are in bankruptcy.  The main goal is to save the home, or the value it represents before losing the home to a foreclosure sale.

We are attorneys in New Jersey and New York with affiliate offices in India that can sell your properties when you face financial difficulties.

Can I sell my property in foreclosure?

The answer that question is, “Yes you can.”
There are two ways to do it.
1.You can sell through a traditional sale.
2. You can try to use the short sale Process.

A traditional sale is when you pay back all that is owed to the bank and keep your equity.

A short sale is when you pay your lender less than you owed.

A lot of times we won’t recommend going through the short sale process. Many times the owner of a property receives no benefit from a short sale, however this is not always the case.  We need to perform an extensive remove of the sellers value of the property, debts owed, and long term goals.

When is a Short Sale not Beneficial?

A short sale can come with tax consequences.While doing a short sale if your mortgage was $500,000 in an investment property. You now owe $750,000 as the costs went out of control on that one property. You are set for short sell for $300,000. The bank is going to send you a 1099 at the end of the year for $450,000 as income to you.  On your taxes it may be possible to write off some of this debt, but if you are not insolvent, the IRS may treat this $450,000 or a portion as taxable income.

There is a form you can file with the IRS to get out of paying taxes dependent on your situation. So, make sure to consult with a tax professional in addition to an attorney before going forward with a short sale.

You are also limited to who you can sell a property to in a Short Sale.  You may want to sell to a family member, however the bank may view this as fraud.  You may not be able to arrange a use and occupancy agreement to stay in the home after the sale.  It is possible at times to get cash for keys in a short sale, or moving money, hover neither of these are a guarantee. These draw backs can normally be overcome in a traditional sale, plus you are allowed to financially benefit from the sale.

What is the benefit of Selling a home while in Foreclosure?

Many times you as the home owner will benefit from selling your home on the open market, so you can keep the equity in the property. You get to chose when to sell, and are normally able to get a use and occupancy agreement if you need time to arrange a new place to live.  If you would qualify for a short sale, then you should also look into a short pay off where you pay less than you owe, and get to keep your home instead of an investor taking your home.

So if you go with a short sale, instead of owing the bank money you may owe the IRS money. And, they’re not as fun as a bank let me tell you as New Jersey Attorney even I do not want to mess with the IRS.

But I’m going to talk about a traditional sale foreclosure. You may sell your property all the way up until ten days after the foreclosure has occurred.

It’s called the right of redemption. I do not do not recommend waiting that long. I always have my clients if I can, close prior to a sheriff’s sale date. It just makes everything so much easier proceduraly and there’s a lot less risk and a lot less stress. Let’s just say it’s a lot neater.

How does it works to list you property for sale traditionally through a realtor?

Contact a realtor.  State what you are trying to do.  If the realtor is not a good fit or you do not like the realtor for any reason, look for a different realtor before signing any contract. A reputable realtor should be able to get your home ready to sell, and walk you through the true value and likely hood of a sale at different price points.

Can I sell my home as a “SALE BY OWNER” during a foreclosure?

Yes, you can. But, I don’t like working with Sale By owner deals during the foreclosure process. There are a lot of times my clients get overwhelmed with their circumstance surrounding the foreclosure process. I understand why that occurs, but having my client list their own property by owner requires me to rely on my client to do one of the major components of their own sale. Which is to sell the asset and get a decent contract.

The owner of sold his home using a Realtor as he couldn’t get the price he wanted.  So, if you are trying to save on a commission trying to do it yourself, you may discover the only people calling you are realtors trying to get your listing an investors trying to give you 80% of what your home is worth.

You also need to be wary of people trying to assign your property. An assignment works when one person gets you under contract for say $200,000 and then sells it to someone else for $250,000 pocketing the $50,000 in equity that could have been yours if you could have contacted the person offering $250,000 directly.

Why should I use a Realtor to sell my property while in Foreclosure?

Having a Realtor to sell a property allows an expert to work on the deal. If you are trying to save a commission at this late hour in the game, you may lose everything. And, a Realtor provides another perspective. Most realtors have hundreds if not thousands of people on their contact lists that are investors.  If you are at the end of the foreclosure process, you may need to get a cash buyer to close fast.  Or, not have the luxury of selling to someone who is having trouble getting a mortgage.  Knowing what it is to get a cash buyer versus a mortgage buyer and what an as is AN AS-IS-SALE  can save a lot of heart ache when trying to sell a home in a foreclosure situation.

As the Real Estate attorney who is representing you in a suit in a distressed situation like this, it means the attorneys to keep an eye on the foreclosure action so the house doesn’t get sold out from under you. In a situation like when clients like you come to my law firm,  they come first and I work to make sure the foreclosure will not be lost. Using  a realtor to list and  sell the property makes everyone’s lives easier. Especially if the Realtor can get a contract that benefits you and find a buyer that wants to work with you on your time line.

My firm also work with our clients to go through all the title conditions of a sale.  We make sure all the judgments and whatever else is required to be taken care of to clear title. We want to get to the closing table and ensure you get the benefit of your property.  We want the title company to issue a check to you, and that you do not lose your home and the value it represents.

Can I sell my home while in Bankruptcy?

Yes, you can sell your home while in bankruptcy.  But, you need to get the courts permission to sell the property. If your home was already scheduled for a sheriff sale, you may be able to avoid paying the sheriff’s commission that would be due.   The motion to be made to sell the home is fairly complex.  We do not recommend trying this without an attorney.

When ever we help sell a property that is in foreclosure,  we make sure that the bank or the lender is paid in full. This would result in a couple things happening. First thing is that the lis pendans that was attached to the property will be discharged. The second thing is that you’ll get a satisfaction a mortgage. The final thing is that the foreclosure action will be dismissed or a final judge will be vacated.

After these three items are taken care of, the foreclosure action will be dismissed.

What can I do to get extra time to sell my home before a foreclosure sale?

Sometimes depending on the circumstances, you may feel like you have run out of time to sell your home before a sheriff sale is scheduled to happen.  There are 3 ways to get additional time:

  1. Petition the Sheriff as the borrower to adjourn the sale for 56 days.
  2. Ask the State court to get extra time to complete the sale of the property.
  3. Declare bankruptcy to complete the sale within the bankruptcy.

The court will not always grant the additional time, however speaking to an attorney first, you may be able to set up the request from the court be granted if the application is complete and the court sees that by granting the motion everyone will benefit.

Declaring bankruptcy may allow you the time to sell the house, or even get caught up on back payments over a 5 year period to not have to sell.

What to do after a Sheriff Sale?

Even if your home has been sold at a sheriff sale, you have options:

  1. You can redeem your property. Up to 10 days after the sheriff sale you may be able to pay off the sheriff.
  2. If you file a chapter 13 bankruptcy during the 10 day redemption period, you can extend the time to redeem to 60 days.
  3. You may be able to get the sale vacated if there were irregularities with the sale.
  4. The buyer of the property may not complete the transaction with the sheriff and the property will be relisted for sale, which opens up other possibilities.
  5. Eventually the bank or the third party buyer will have to move for you to be ejected from the property, at which point you may be able to negotiate cash for keys to leave, or get additional time in your home.  So, the timeline for when you must leave your home after a sheriff sale vary. And, if you are a tenant, you have strong rights than the former owner of the property.

Before you take any course of action, we recommend you speak with an NJ Foreclosure Defense attorney for free to go over all of your options.  It costs you nothing, and allows you to come up with a tailored plan to help you that may even avoid having to sell your property.  Call us at 973-200-1111 or email us at Or click hear to schedule a free strategy session on the phone or in person for a time that works for you.

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