Can I Sell My House In San Francisco Bay Area If I’m Behind on Payments
When homeowners struggle to pay their mortgage, they often seek mortgage forbearance or loan modification. But if they’ve missed many payments, negotiating with the mortgage company can be hard. That’s when most people decide to sell their property in San Francisco Bay Area to settle their debts.
Selling a house is possible even if the owner is behind on mortgage payments, as long as it’s not yet foreclosed. If the homeowner is in financial distress, the lender may agree to a short sale. Alternatively, if the house has equity, another option is selling to a cash buyer or real estate investor since they buy houses as-is and close deals quickly.
For more about selling a house when behind on mortgage payments, keep reading. We cover all you need to know, from selling options to alternative ways of selling your house in San Francisco Bay Area.
Can I Sell My Home in San Francisco Bay Area If I’m Behind on Mortgage Payments?
Sure, here’s a simplified version:
Yeah, you can sell your house in San Francisco Bay Area even if you’re late on mortgage payments, as long as it’s not foreclosed or auctioned yet.
Actually, selling before foreclosure is pretty common in real estate now because more people are falling behind on payments.
For example, in 2021, the Consumer Financial Protection Bureau (CFPB) said 2.1 million families in the US were at least three months late on loans. That’s about $90 billion owed to real estate lenders and probably lots of short sales.
But before we talk about selling your house in San Francisco Bay Area, whether through a short sale or something else, it’s important to know what happens when you miss mortgage payments.
Pre-Foreclosure Process
When you get a mortgage, your property gets a claim on it. So, if you can’t pay what you owe, the company that gave you the mortgage, whether it’s a bank or another lender, can take over your home and usually sell it to cover what you owe them.
This can really hurt your credit score and make it harder for you to get another mortgage.
Even though the exact steps to take back a property vary depending on the state, here’s the general idea of how it usually goes:
1. Default
If you missed your mortgage payments three months in a row, the lender would inform you that you’re in default and give you a chance to catch up on your loan.
2. Public Notice
If you fail to pay, the mortgage lender files a notice of default or foreclosure notice in the county clerk and declares intent to sell your house. The foreclosure process would then commence.
3. Foreclosure
Foreclosure usually spans from 90 to 120 days, depending on the state. This is when it is ideal to sell the property to a cash buyer or opt for a short sale.
4. Auction
If you haven’t requested different payment terms from the mortgage lender arranged a short sale or sold the house for cash, it will go to auction, and the mortgage servicer will retain the proceeds.
5. Post-foreclosure
Failure to move out will result in being evicted from your property usually 30 days from the auction.
Selling a House in San Francisco Bay Area When Behind on Payments
Lots of homeowners facing foreclosure wait to sell their property in San Francisco Bay Area. But those who move quickly can sell before auction and use the money to pay off their mortgage.
Selling a home in San Francisco Bay Area when you’re behind on payments isn’t too tough—it’s only hard when you don’t know about real estate sales.
To guide you through selling your home in San Francisco Bay Area while behind on payments, here are your 4 main choices:
1. Sell to a Cash Buyer
Selling your home to a cash buyer or real estate investor is likely the quickest route to avoid foreclosure. Cash buyers are known to purchase houses in as fast as seven days, so you immediately get the money in your bank.
They also cover closing costs and other processing fees— another reason why they keep on dominating the real estate market.
Below is an extensive list outlining the advantages of selling your house to a cash buyer:
- Fast and Flexible Closing: Selling off-market to a cash buyer enables prompt payment of your mortgage balance to the bank. Many home buyers finalize transactions within two weeks. Conversely, selling a property through the traditional real estate market typically spans from 49 to 79 days. Delays may occur, especially if you’re in arrears on mortgage payments and confronting foreclosure.
- No Appraisal: A traditional house sale requires an appraisal for mortgage companies to determine if the purchase of the property is worth financing. Cash buyers remove appraisal from the equation, which means a faster sale timeline and fewer expenses.
- No Repairs Needed: If you’re behind on mortgage payments due to a hard financial situation, the last thing you want to spend money on is house repairs and renovations. Luckily, cash buyers buy houses as-is, eliminating the cost of expensive repairs.
- No Marketing and Showings: Since selling to a cash buyer is direct, you won’t have to list and market the property on the MLS as well as schedule showings. This saves you time, effort, and money.
- No Agent Commissions: There is no need for a real estate agent when you request a fair cash offer. This means you won’t have to pay a 6% real estate agent commission.
- Less Paperwork: Selling a house conventionally involves managing numerous documents. Luckily, by selling directly to a cash buyer, they take care of nearly all paperwork for you.
- More Certainty: Selling to a cash buyer reduces uncertainty as they don’t need financing. Keep in mind, that these buyers have cash available, so they can prevent foreclosure, unlike retail buyers who require a mortgage lender approval.
5 Steps on Selling a House to a Cash Buyer in San Francisco Bay Area When You’re Behind on Payments
Now that we’ve gone over the perks of selling your home to a cash buyer in San Francisco Bay Area when you’re behind on your mortgage, let’s talk about the steps to get you started.
1. Request a Fair Cash Offer
Asking for an offer from a cash buyer is easy. Just find cash home buyers online and check out their site or call them. They usually give you a no-obligation offer.
If you have time before foreclosure, talk to multiple cash buyers for offers. Don’t just go with the one closest to your home’s estimated fair market value. Confirm they can close on your property before auction and are a trusted cash buyer.
2. Home Walkthrough
To give an accurate offer, the buyer with cash may want to inspect your property. They’ll look for any fixes or upgrades required, especially those concerning the structure. Keep in mind, that they won’t request you to make any repairs since they buy houses as-is.
3. Select a Move-Out Date
If you need to sell your home quickly in San Francisco Bay Area due to late loan payments, you likely want to do so fast. But many cash buyers won’t finalize the deal until you’ve moved out. So, pick a move-out date and inform your cash buyer to expedite the sale.
4. Review and Sign the Contract
If you accept a cash offer, the cash buyer will electronically provide you with a contract. They’ll give you time to review the terms and ask questions. If everything is clear, you can sign the contract to make the home sale official.
5. Real Estate Closing
At closing, you’ll go over and sign some papers. After that, the cash buyer officially owns your house, and you get paid in your bank. Then, you can use the money to cover any missed loan payments, including late fees.
2. Short Sale
A short sale occurs when a property owner faces financial challenges like job loss or health issues and sells their property for less than the mortgage owed.
Lenders often agree to a short sale to avoid foreclosure, forgiving the remaining mortgage balance. Sometimes, they may pursue a deficiency judgment, requiring the homeowner to pay the remaining balance post-sale.
Short sales typically happen when the property’s value is lower than the mortgage owed, and the homeowner proves financial hardship through income/assets verification or a hardship letter.
Short sale processing by the bank can take several months. To increase approval chances, homeowners should promptly submit the required documentation.
- Comps or comparative market analysis of your home
- A hardship letter.
- Tax returns from the past two years.
- Payroll stubs
- Income statements
- Bank statements.
- W-2s from the past two years
- Request for mortgage assistance or financial statement.
- Medical bills (if applicable)
3. Sell with a Real Estate Agent In San Francisco Bay Area
If you’re at risk of foreclosure (e.g., you missed a payment) and the local housing market is strong, you may want to list your property with a real estate agent.
Conventional sales methods could attract more potential buyers, possibly leading to better offers. Agents can help secure a fair price even if you’ve fallen behind on mortgage payments.
However, selling through an agent and using traditional channels entails appraisal, inspection, and possibly repairs and enhancements such as improving curb appeal.
Additionally, you’ll need funds for staging and cleaning, which can be costly and add to your financial strain during pre-foreclosure.
4. Sell For Sale by Owner (FSBO)
To avoid commission fees and gain as much money as possible, many homeowners try to sell their property on their own. While this may work for some, in most cases, this leads to failure in selling the house in San Francisco Bay Area.
Alternatives to Selling Your Home In San Francisco Bay Area When Behind on Payments
Although you’re already thinking that selling your home is the only solution when you’re behind on your mortgage payments, you have a few options to get back on track and avoid pre-foreclosure. They are the following:
Mortgage Forbearance
Mortgage forbearance is when the lender gives the homeowner a break from making monthly payments for a while. It’s like a timeout on paying until the homeowner can manage their finances better. This break could be for a few months or even longer, depending on what the homeowner and lender decide.
Loan Modification
A loan change is when you and your lender or bank agree to adjust your mortgage terms to prevent foreclosure. This may mean stretching out your payments, reducing the interest rate, and more. It can protect your credit.
To get a loan change, you need to ask for help with your mortgage and give them some financial papers. These could be your pay stubs, income records, monthly mortgage statements, bank statements, utility bills, and so on.
Chapter 13 Bankruptcy
If you work for a wage and have money troubles, you may consider Chapter 13 bankruptcy at your nearby bankruptcy court. This is a final option if you’re at risk of losing your property since it can hurt your credit badly.
Chapter 13 bankruptcy, also known as the wage earner’s plan, lets you pay off your loan or mortgage over three to five years in smaller parts.
According to the United States Courts, the most significant advantage of filing for Chapter 13 is that it saves houses from foreclosure. Check with your local bankruptcy court if you can still qualify for this relief.
Final Thoughts: Can I Sell My Home In San Francisco Bay Area If I’m Behind on Payments from Mortgage Lenders?
Selling your house in San Francisco Bay Area during financial troubles can be tough. But selling your home and moving to a smaller one while struggling with payments can prevent bigger problems, like losing your home to foreclosure later on.
If you can’t delay your mortgage or a loan change isn’t helpful, start looking for buyers. Prioritize investors or those who pay in cash to speed up the process, which may be easier than using a real estate agent.
At We Buy Houses in San Francisco Bay Area, we’ll buy your home fast and without charging fees. Plus, we won’t ask for repairs, so the money you get at closing could cover your debts!
To get a fair cash offer now, fill out our form or call us at (408) 557-7554 to discuss selling your home despite payment delays in San Francisco Bay Area.
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Author: Saini
My name is Saini, and I founded the We Buy Houses in San Francisco Bay Area team with years of experience in the real estate industry. I have assisted numerous sellers in selling their homes quickly, “AS-IS”, and for a fair price.
He’s been featured in multiple publications including Yahoo Finance, GoBankingRates, LegalZoom, The Mortgage Report, Apartment Therapy, US News and World Report, and SuperMoney among others.