Can I Sell My House Before Foreclosure?

Can I Sell My House Before Foreclosure

If you are facing a foreclosure, you can sell your house any time before the bank actually auctions it.

The amount of time you have to sell the house from when you receive the foreclosure notice to when the house is auctioned depends on the type of foreclosure and the procedure of foreclosure in your state.

The earlier you start the sale process, the better, as it gives you more time to prep the house, list, get a home buyer, and close.

This article will provide an overview of the foreclosure process to help you figure out your timeline and legal requirements at each stage. It will then discuss your options for selling your house in foreclosure.

Table of Contents

An Overview of the Foreclosure Process

If you have defaulted on your mortgage payments, your mortgage lender will contact you via phone or mail to follow up on the missed payment.

If you miss the subsequent payment, your lender will likely reach out again to follow up. If you go for three months without making payment, the lender will send you a Notice of Breach or demand letter alongside a 90 days foreclosure notice.

You have 90 days to catch up on the payments or negotiate with the mortgage lender to adjust the payment plan. If you won’t have made a payment within the 90 days, the lender initiates a foreclosure process with the court.

In Denver, the foreclosure process is non-judicial, whereby the lender must prove the debt. Once the mortgage lender has successfully recorded the demand with the court, they should issue you a notice of sale homeowner within 20 calendar days.

In Colorado, when facing foreclosure, it can take 110-120 days on average, from the date the demand is recorded to the auction date.

You will be summoned to the court within 60 days of receiving the foreclosure notice. The court will attempt to facilitate an agreement between you and the lender to settle the debt and possibly prevent foreclosure.

If you do not reach an agreement or do not respond to the summon, a sale date for the house will be issued.

On the sale date, the house will go through a foreclosure auction to find the highest bidder.

Once the sale is closed, you will be required to vacate the house immediately or within a few days; or else, the local sheriff will through you out and impound any of your belongings in the house.

Foreclosure notice and foreclosure workshop cover page

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Things to Consider When Selling a House in Foreclosure

Value the House vs Amount Owed

The most appropriate option for selling a house in foreclosure largely depends on the house’s value versus how much you owe. If the house’s value is higher than the amount you house, the mortgage is considered “above water.” Conversely, if it is below the amount owed, it is considered “underwater.”

Traditional Sale vs Short Sale

If it is above water, the best option would be to proceed with a traditional sale, whereby you sell the house as you would if it was not in foreclosure, pay off interests and remaining mortgage, and probably save on any profits.

This option preserves your credit score. However, you must be able to close your sale before the foreclosure sale date for it to be successful.

If you are underwater with your mortgage and in a difficult situation, a short sale with an appeal for a deficiency judgment is most suitable. It would still hurt your credit but not as badly as a foreclosure.

The short sale would need to be approved by the seller, and you have to prove that you cannot continue to make your mortgage payments. It is at the lender’s discretion to accept or reject your proposal for a short sale. They are more inclined to accept the offer if the short sale is likely to raise more money than a foreclosure.

If they do, they are involved in every step of the sale process. You may also need a real estate attorney or real estate agent with experience in short sales to facilitate the process. All proceeds go towards settling your mortgage payment. If there is a difference, you must pay it unless a deficiency judgment is passed.

Market Trends

Some key factors and market trends that affect the real estate market include prices, demand vs supply, investment potential, and government policy. It is much easier to sell a house in a seller’s market than in a buyer’s market.

In most cases, the house value is above water in a seller’s market enabling you to sell the house fast at or above the fair market value. In contrast, selling your house in a buyer’s market can be challenging, and you may have to sell below appraisal value to compete effectively.

How Much Time You Have Before the Foreclosure Auction Date

You can sell the house and pay off the amount owed and any accrued interest until the sale date. It can take a few weeks to several months to sell a house.

Therefore, depending on how soon you list it and the demand for property in your area, you may have enough time to sell before the foreclosure auction date.

If you are in the middle of a sale process by the auction date, you can request the lender for an extension to close the sale and pay your dues. Most will be willing to allow you 30 days if the sale is likely to raise more money than a foreclosure would.

Other Options for Selling a House in Foreclosure

Other than a traditional sale or a short sale, below are other options for selling a house facing foreclosure.

Forbearance Sale

Even if you put up your house for sale during foreclosure, you are still required to keep making your mortgage payments. If not, the penalties and interests continue to accrue. To save up on the penalties, consider a forbearance sale.

A forbearance is when you reach out to the lender to negotiate a more affordable mortgage payment plan or temporary relief. You can put up the house for sale in the forbearance period.

Suppose the lender agrees to a reduced mortgage installment. In that case, you will be able to continue to make the mortgage payment while the house is on sale without accruing any penalties or interest.

If the lender agrees to temporary relief, you do not need to pay any monthly installments while the house is on the forbearance sale. At the close of the sale, you pay the lender all amount owed from the proceeds.

Furthermore, the lenders may exempt you from making mortgage payments in the period between getting an offer and closing the sale or as you await the escrow transaction to complete. The mortgage payments within that period will be deducted from the sale period without accruing any penalties.

Assumable Mortgage Sale

If your mortgage is assumable, you can sell the house and transfer the debt to the new buyer. Therefore, the new buyer will take over your loan balance and interest rate. Assumable mortgages are only available for VA and FHA loans only. Market the house as an assumable mortgage listing to quickly improve your chances of getting a potential buyer.

An assumable mortgage sale works well if it offers the buyer a better interest rate than the housing market. However, the process of facilitating this type of sale can be quite complex.

You would need to get approval from your lender before initiating the sale. The buyer must also pay the difference between the remaining mortgage balance and the house sale price in cash. A lot of formalities and paperwork are involved in an assumable mortgage sale.

Bankruptcy Sale

If all the other options for selling a house on foreclosure do not work for you, you could consider filing for bankruptcy and then selling the house during the automatic stay. Note that this approach will hurt your credit severely.

When you file for bankruptcy on the house on foreclosure, the court issues an order of relief, which gives you an automatic stay. The automatic stay prevents the lender from foreclosing on your house. It also allows you to negotiate a payment plan with the lender for up to 5 years.

While on automatic stay, you may sell the house, but you would have to get approval from the bankruptcy court. The sale will likely be allowed with all proceeds towards the mortgage repayment.


You do not have to wait to be evicted from your house in a foreclosure. Instead, you can sell the house any time before the auction date. The goal is to sell the house before the auction date and use the proceeds to pay off your debt.

As evidenced in this article, there are different ways you can sell a house in foreclosure, including a traditional sale, short sale, forbearance sale, assumable mortgage sale, and bankruptcy sale.

Assess these options to determine which one would be most suitable for you. If you are unsure how to sell the house, consult with or hire a real estate attorney or realtor. You could also contact us for a quick and fair cash offer sale. is the best Denver home buyer! No matter what shape or size the home may be in we will give it the best shot possible. Whether you need help selling your home quickly or need to sell it for the best price, we can help. Simply give us a call or fill out an online form and our team of experts will get started, quick and smart, to help you get your house SOLD!


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