One of the most effective ways for homeowners to find a way out of foreclosure is simply to sell their property on the open market. In the best of cases, this will allow them to stop the foreclosure process, pay off the defaulted loan in full, and leave the house with a little extra cash for moving expenses, bill payments, or to establish an emergency fund. If the house is sold early enough in the process, the homeowners may even be able to preserve enough of their credit to purchase a new, more affordable home. But even listing a home for sale should just be one of the homeowners' options, and should not be solely relied upon.

The main drawback of listing a house for sale in order to avoid foreclosure is the lack of time. The foreclosure process will not simply stop just because the owners are attempting to sell the house, creating a race which will decide who and on what terms the property will be unloaded. If the foreclosure victims win, they can work with the new buyer and negotiate the price, closing costs, and every other part of the agreement. However, if the bank wins through the court process, they home will be forcefully sold at a county sheriff sale for whatever price is offered. The owners will be completely cut out of negotiating the terms of the sale.

Unfortunately, with the real estate market in such a slump, selling a house to stop foreclosure may be quite a challenge for homeowners. Houses now typically sit on the market for over six months to a year with no real offers. This almost guarantees that the foreclosure victims will have to request more time from the lender in order to locate a buyer. Although many banks will give the homeowners every opportunity to work out a solution by stopping the sheriff sale, an entire year is a long time for the bank to leave the foreclosure process on hold.

Of course, one of the ways to avoid waiting for long periods of time and hoping to stay in the good graces of the lender is for the homeowners to sell quickly. If they have a lot of equity in the house, many professional investors will be interested; their offers, though, will leave the homeowners with no real profits beyond a little extra cash to move out. Such bargain shoppers of the real estate industry can often be found advertising on billboards or in classified ads, with messages such as "We Buy Ugly Homes," "Cash For Your Home Today," and the like. There is nothing wrong with these investors, but they will leave homeowners with little to show for any equity they may have in the home.

A short sale is another possibility for homeowners who do not have time to sell the house through the open market and who may have little to no equity. Selling short will require the lender to accept a lower amount of a payoff than what they are owed on the loan, and each bank's short sale procedures are a bit different. However, if they accept the offer, the homeowners will be able to sell the house and at least escape from the foreclosure nightmare. There is little chance of getting much equity out of the sale, but it is a much better outcome than watching the home sold at a foreclosure auction

Selling the house should be considered by every homeowner facing the danger of foreclosure. Due to some of the drawbacks, though, such as the time required for an open market sale and the control that the lender can exercise over the sheriff sale and short sale processes, selling should only be one of many ways to stop foreclosure that homeowners examine. As we always recommend, having more than one backup plan is an absolute necessity when facing the loss of a home. Buyers back out at the last second, mortgage applications are rejected, or unexpected title issues come up that derail the process. But for homeowners who want to make a true fresh start after foreclosure, selling the house as one of the last resorts may allow them the second chance with a new home that they are seeking.

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