Buying a home is a huge milestone. But sometimes, life throws you a curve ball after you settle in — you might lose your job, get divorced, or lose a loved one. In difficult times, it can be easy to fall behind on your monthly mortgage payments. Miss too many, though, and you could end up in foreclosure.
Facing foreclosure brings extreme emotional and financial stress, but you have options — even if you’re already behind on your payments.
Sometimes the best option is to sell your house before you lose it. But other times, you might be able to work out a repayment plan with your lender. The key is to understand the options available at different points in the foreclosure process and act quickly to ensure you get the best possible outcome.
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What is foreclosure?
Foreclosure is a legal process in which your home loan lender will sell your property, typically at auction, to pay off what you owe on your mortgage. The exact process varies by state, but foreclosure generally starts when you’ve missed three to four consecutive months of payments.
“After your first and second missed payments, you face late fees and a hit to your credit,” explains Ashley Morgan, attorney and owner of Ashley F. Morgan Law, PC, in Virginia. “But your lender will still take payments and even partial payments. After being over 90 days behind, the lender often will not accept a partial payment, which means you have to bring the loan fully current.”
A foreclosure stays on your credit report for seven years[4] from the date of the first missed payment. As a result, some lenders may refuse to work with you for future home purchases.
Then, there’s the psychological impact[5] of losing a home. Recent research shows that foreclosures can increase depression, anxiety, and other mental health challenges. They can also strain personal relationships and heighten feelings of shame or embarrassment.
How foreclosure works
A foreclosure happens in phases. It typically takes four months[6] to reach that point, and the foreclosure process could last years.
After your third missed payment, you’ll receive a “Demand Letter” or “Notice to Accelerate” from your lender. This notice gives you 30 days to bring your mortgage current, or the lender will begin foreclosure proceedings.
After a fourth missed payment, you’ll be referred to your lender’s attorneys. At this point, you’ll be responsible for paying all attorney fees in addition to the defaulted mortgage payments.
If you can’t pay, the attorney will schedule a Sheriff’s or Public Trustee’s Sale. You have until the sale date to pay the amount owed or make other arrangements with your lender. The sale date is considered the day of foreclosure. According to ATTOM[7], it took an average of 762 days to foreclose on a home in the last quarter of 2024.
The process and timeline will differ depending on whether it’s a judicial or nonjudicial foreclosure. Depending on the state, the lender may file a deficiency judgment lawsuit if the foreclosure sale proceeds didn’t fully cover the debt. If this suit is granted, you would be responsible for paying the difference.
Judicial foreclosure
A judicial foreclosure[1] occurs in court and could take nearly a year. Here’s how a typical judicial foreclosure may go:
- You fall 3–4 months behind on mortgage payments.
- The bank sends a notice that you’ve entered the preforeclosure period.
- The bank files a foreclosure lawsuit asking the court to authorize a foreclosure sale.
- You receive a summons and a copy of the complaint, giving you 20–30 days to respond (a response is optional).
- If you respond, you may move to the discovery phase, during which you and the bank review each other’s evidence.
- The court enters a judgment and orders a foreclosure sale, in which the property is sold to the highest bidder.
- Some states offer a redemption period after the sale, during which you can reimburse the successful bidder or pay off the entire mortgage debt to recover ownership of your home.
- You’ll receive an official notice to leave the property.
Non-judicial foreclosure
A nonjudicial foreclosure[2]takes place outside court and may only take 1–2 months. The process varies by state and is similar to a judicial foreclosure, but with some differences.
- You fall 3–4 months behind on mortgage payments.
- Depending on the state, you’ll receive a notice of default, notice of sale, or both.
- Some state laws allow you to reinstate the loan, meaning you can pay what you owe (plus fees and other costs) before the sale.
- If you don’t reinstate the loan, your home will be sold at auction.
- Some states offer a redemption period, when you can buy back or “redeem” your property.
- If you haven’t vacated the property, you’ll do so now.
⚠️ The foreclosure process varies by state
Each state sets foreclosure laws. Some states only allow judicial foreclosures, while others only allow nonjudicial foreclosures. Thirty-two states allow both.
The time from the foreclosure notice to the sale also varies, ranging from a minimum of 10 days in Florida to 120 days in Idaho. Some states also have a redemption period after the sale, during which you can buy back your property, although this may not apply in all situations.
Nolo has a brief rundown of each state’s foreclosure laws[8]. Foreclosurelaw.org[9] has more detailed state-by-state information, or you can contact a housing counselor through the U.S. Department of Housing and Urban Development (HUD)[10].
⏰ Foreclosure timelines by state
| State | Days After Missed Payment Before Foreclosure Begins | Minimum Notice Period Before Sale | Right to Reinstate Before Sale | Redemption Period After Sale |
|---|---|---|---|---|
| Alabama | 120 days | 3 weeks | No | Yes |
| Alaska | 120 days | 3 weeks | Yes | No |
| Arizona | 120 days | 91 days | Yes | No |
| Arkansas | 120 days | 60 days | Yes | Yes (judicial only) |
| California | 120 days | 20 days | Yes | No |
| Colorado | 120 days | 45 days | Yes | Varies |
| Connecticut | 120 days | 30 days | No | Yes |
| Delaware | 120 days | 14 days | No | Yes |
| District of Columbia | 120 days | 30 days | Yes | No |
| Florida | 120 days | 10 days | No | Yes |
| Georgia | 120 days | 15 days | Yes | No |
| Hawaii | 120 days | 35 days | Yes | No |
| Idaho | 120 days | 120 days | Yes | Yes (judicial only) |
| Illinois | 120 days | 30 days | No | Yes (limited) |
| Indiana | 120 days | 90 days | Yes | No |
| Iowa | 120 days | 28 days | Yes | Varies |
| Kansas | 120 days | 28 days | Yes | Varies |
| Kentucky | 120 days | Varies | Yes | Yes |
| Louisiana | 120 days | 30 days | Yes | No |
| Maine | 120 days | Varies | Yes | No |
| Maryland | 120 days | 15 days | Yes | Yes |
| Massachusetts | 120 days | 21 days | Yes | No |
| Michigan | 120 days | 4 weeks | Yes | Varies |
| Minnesota | 120 days | 8 weeks | Yes | Yes |
| Mississippi | 120 days | 3 weeks | Yes | No |
| Missouri | 120 days | 20 days | Yes | Varies |
| Montana | 120 days | 120 days | Yes | No |
| Nebraska | 120 days | 4 weeks | Yes | No |
| Nevada | 120 days | 15 days | Yes | No |
| New Hampshire | 120 days | 25 days | Yes | No |
| New Jersey | 120 days | 10 days | Yes | Yes |
| New Mexico | 120 days | 30 days | Yes | Yes |
| New York | 120 days | 4 weeks | Yes | No |
| North Carolina | 120 days | 20 days | Yes | Varies |
| North Dakota | 120 days | 90 days | Yes | Yes |
| Ohio | 120 days | 3 weeks | Yes | Yes |
| Oklahoma | 120 days | 75 days | Yes | Yes |
| Oregon | 120 days | 120 days | Yes | Yes (judicial only) |
| Pennsylvania | 120 days | 60 days | Yes | No |
| Rhode Island | 120 days | 21 days | Yes | No |
| South Carolina | 120 days | 21 days | Yes | No |
| South Dakota | 120 days | 4 weeks | Yes | Yes |
| Tennessee | 120 days | 30 days | Yes | Yes |
| Texas | 120 days | 41 days | Yes | No |
| Utah | 120 days | 31 days | Yes | No |
| Vermont | 120 days | 90 days | Yes | Varies |
| Virginia | 120 days | 60 days | Yes | No |
| Washington | 120 days | 90 days | Yes | No |
| West Virginia | 120 days | 4 weeks | Yes | No |
| Wisconsin | 120 days | 6 weeks | Yes | Varies |
| Wyoming | 120 days | 38 days | Yes | Yes |
Options for selling a house before foreclosure
If you want to sell your home to avoid foreclosure, you have various options depending on where you are in the process and how much you owe.
🤝 Traditional home sale
Pros
- You’re more likely to get your home’s market value selling this way.
- A realtor will know how to price and market the house for a quick sale.
Cons
- You’ll have to pay a realtor’s commission fee (typically 2.74% of the sale price).
- You may have to make costly repairs and pay closing costs.
A traditional home sale is generally going to get you the max value for your home. However, if you want to go this route, it's best to start early — ideally, after the first missed payment — since selling a house can take an average of 88 days.
Also, consider your home’s worth versus how much you owe. A home value estimator can give you a decent idea of your property’s value.
“In the best-case scenario, your home’s value is higher than your mortgage balance,” says Alexi Morgado, a realtor and founder of Lexawise Real Estate Exam Prep. “In this case, you can do a traditional sale.”
Once you know your home’s worth, ask your lender what you’ll owe if you sell. This should include your missed mortgage payments plus any late fees. Then, subtract the cost to sell a home, which is more than $54,000 when you count the listing agent commission, repairs, closing costs, and other expenses.
An experienced real estate agent will be your best friend in this situation. They can help you price the home correctly and market it to sell fast.
If you want to keep as much of the sale profit as possible, try a low-commission real estate company. These agents charge significantly less than the average 3% — often as low as 1–1.5% — which could save you thousands of dollars.
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💰Sell to a cash buyer
Pros
- You can sell your home fast for cash.
- You don’t have to fix up your house and can sell as-is.
- Close in as little as 1–2 weeks.
Cons
- Cash buyers and iBuyers rarely offer market value.
- If your home needs repairs, you’ll lose some value selling as-is.
- Negotiating with the lender on your own can be challenging.
Working with an investor or company that buys houses for cash is the quickest way to sell your home. Most of these companies give you cash for your house as-is and can close in 1–2 weeks.
While some see ‘we buy houses’ companies as ripoffs, they can be an excellent option if you’re facing foreclosure — especially if you’re selling a home that needs work. You likely won’t get the full market value, but you’ll save some on the cost of repairs. The amount a cash buyer or investor will pay for your house is often 60–80% of its after-repair value (ARV), so make sure you’ll get enough from the sale to cover what you owe.
iBuyer companies are another option for a quick cash transaction. They tend to pay closer to market value than other cash buyers, but some charge additional fees. Many also have specific criteria that your property must meet, like its age or size.
Cash buyers and iBuyers provide free, no-obligation offers, so it’s worth seeking several to get the best price for your home. A free service like Clever Offers can match you with multiple offers from investors and iBuyers, saving you the time and hassle of gathering various quotes manually.
Experience is crucial with cash transactions as well. Look for a buyer who has worked with sellers like you before, as a home in pre-foreclosure may come with extra complexities.
“Buyers in these situations are often investors or people looking for a deal, and transactions can move quickly, but they can also be complicated,” says Roy L. Kaufmann, an attorney and director of Servicemembers Civil Relief Act Centralized Verification Service (SCRA). “Negotiating with the lender, handling liens, and making sure the sale covers the arrears can be tricky."
🏦 Short sale
Pros
- You’ll do less damage to your credit score.
- Most or all of your mortgage debt will be absorbed through the home purchase or forgiven by your lender.
Cons
- Your credit score will still take a hit.
- You cannot negotiate the sale price.
- You receive no proceeds from the sale.
- You must complete a waiting period before getting a new mortgage, which could be 2–7 years.
In a short sale, you sell your home for less than you owe. Your mortgage lender must approve a short sale. This is something you can enter into voluntarily before foreclosure becomes a risk.
“Short sales are usually less damaging to your credit score than a foreclosure and can even result in debt forgiveness,” Morgado says.
To qualify for a short sale, you must submit a hardship letter to your lender explaining that you cannot make mortgage payments because of a financial hardship. You’ll also need to provide documentation like bank statements and copies of bills.
If your lender approves the short sale, you’ll list your home for sale. While you can do this without a real estate agent, it isn’t recommended. Instead, look for one certified in short sales to help you navigate the complex paperwork.
As you receive offers, you’ll submit them to your lender, who will negotiate on your behalf. Once they accept an offer, you may have to pay the difference between the sale price and the mortgage’s remaining balance. For instance, if you owe $200,000 on your mortgage and sell for $175,000, you may have to pay the $25,000 difference.
📃Deed in lieu of foreclosure
Pros
- You’ll reduce or eliminate your mortgage debt.
- Your lender may let you lease the property.
- You can avoid the embarrassment and stress of a foreclosure.
Cons
- It hurts your credit score, although not as severely as a foreclosure.
- It may be harder to get another mortgage in the future.
In a deed in lieu of foreclosure agreement, you voluntarily turn ownership of your home over to your lender. Not only will you avoid foreclosure, but you also may not be held responsible for the amount left on the mortgage. This is often the last resort for a homeowner, taken after you haven’t been able to sell.
“For a deed in lieu to work, you have to have a fully clean title,” explains Morgan. “This means there cannot be any tax liens or judgment liens against the property.”
A deed in lieu of foreclosure is less damaging to your credit score. More importantly, it releases you from making more mortgage payments or paying off the remaining loan balance. In some cases, the lender may let you lease the property for a set time. This saves them money and gives you time to find a new place to live.
This can also be a less stressful option, as you’ll avoid the public notoriety that typically comes with a foreclosure. And because you and the lender agree on details like when you’ll vacate the property, you won’t have to worry about officials evicting you and your family.
Steps to sell your house before foreclosure
1. Contact your lender. Inform your lender as soon as you decide to sell. Discuss possible options, and make sure you understand the foreclosure timeline in your state.
2. Assess your financial situation. Ask your lender for your mortgage payoff amount, then determine your property’s current value. A home value estimator can give you a rough idea, but a better option is to have a realtor run a comparative market analysis (CMA). The goal is to know your equity and whether you’ll earn enough in the sale to pay off the mortgage.
3. Hire a real estate professional. Look for an agent with experience in pre-foreclosure sales. These realtors will know how to market your home for a quick sale. They’ll also know what repairs you should make and whether a short sale would be a better option based on your home’s value.
4. Price competitively. You may be on a tight timeline, so pricing your home effectively will be vital. Homes sold with realtor assistance go for 13% more[11] than those without.
5. Negotiate offers. Be prepared to negotiate with buyers to get the best possible sale price. Also, keep in touch with your lender throughout the process. If you don’t receive any offers covering what you owe, you may need to explore options with your lender.
6. Close the sale. Proceeds from your home sale will first go toward satisfying the mortgage debt. You may also have to pay late fees and attorney fees.
⏰ Case study: How to sell a house in 7 days or less
Selling a home in a week or less is tricky, but not impossible! Beth and Ryan Waller, a realtor team in Toronto, once had to sell a home within six days to help the homeowner avoid foreclosure.
“The sellers wanted market value for the home (about $1.1 million), but we didn’t have the time, and, given the situation, they didn’t have the luxury to wait for the ‘right buyer,’ ” Ryan told us in an email interivew. “We needed any buyer.”
They listed the home at $999,000 and told the market they would review any offers after day four. The strategy aimed to generate a lot of traffic and receive multiple offers with no contingencies — just a firm deal.
The Wallers marketed the home heavily through print, radio, and multiple MLS boards. They also created a sense of urgency by pricing below market value. As a result, they sold the home in four days for $1.02 million.
“You can’t sell quickly and expect full market value, especially if you don’t have time for professional photos and staging,” Ryan said. “Work with a realtor who is a strong negotiator and marketer. This can make all the difference in selling quickly for top dollar.”
⚡️ If you need to sell fast, start with a free offers marketplace like Clever Offers. Compare legitimate cash offers from vetted investors in your area. Or, choose a 7-day MLS listing to sell your home on the open market in under a week, using a cash offer as a backup. Get the best possible terms for your house, plus expert guidance along the way — no added fees or obligation to move forward.
Alternatives to selling a house in pre-foreclosure
If you don’t want to sell your home to avoid foreclosure, you have other options. But again, it’s essential to talk with your lender as soon as you start missing payments. Lenders are often willing to work with you to find a solution.
“Lenders may offer repayment plans or forbearance if they believe the homeowner can catch up,” says Kaufmann. “Acting early opens the door to options that stop foreclosure before it gains momentum.”
Here are some alternatives to selling your house.
1️⃣ Loan modification
A loan modification[12] adjusts the terms of your loan to make payments more affordable. Your lender might lower your interest rate, extend the repayment timeline, reduce the principal, or convert the loan to a fixed-rate mortgage (if it’s an adjustable mortgage).
To qualify, you must:
- Provide proof of significant financial hardship.
- Be at least 1 month behind on your loan.
- Live in the home as your primary residence.
One trade-off is that you’ll pay more interest over time by extending the repayment timeline. A loan modification could also hurt your credit score unless your lender reports your mortgage “paid as agreed.”
2️⃣ Refinancing
Refinancing could be a good option if interest rates have fallen since you got your loan. This move lowers your monthly payment permanently by reducing the interest rate or extending the repayment term.
When refinancing, you could go from an adjustable-rate to a fixed-rate mortgage, so your payments will be locked in. You might also change lenders.
You’ll need a good credit score to get the best rate. For refinancing to make the most sense, the rate should be at least one percentage point lower than your current rate. Also, remember that you’ll have to pay closing costs, which will be 2–5% of the loan amount[13] .
3️⃣ Forbearance
In a mortgage forbearance, the lender will suspend or reduce your monthly payments for up to one year. To see if you’re eligible, contact your lender to learn which type of loan you have and what the forbearance terms are. Be ready to show proof of financial hardship, such as a job loss, illness, or other short-term setback.
Forbearance won’t affect your credit score because your lender will continue to report you as current on your loan. This is why you must work with your lender on this. Forbearance isn’t automatic, so if you just stop making payments, you’ll hurt your credit score and risk foreclosure.
Refinancing isn’t allowed while you’re in forbearance, although you may be able to refinance after the forbearance ends. If you’re in forbearance and want to buy a new home, you must typically wait three months after your forbearance period ends.
You must repay what you missed, plus interest, at the end of your forbearance period. There are a few options for this:
- Repay what you missed in one lump-sum payment.
- Repay what you missed over a short-term window via a repayment plan.
- Defer the repayments until your original loan term is up.
- Get a loan modification.
4️⃣ Bankruptcy
Filing for bankruptcy will stop the foreclosure immediately (as long as your home hasn’t been sold). Once you file, a court will issue an automatic stay to stop the process, including any collection activities.
You have two options[14] for filing for bankruptcy:
- Chapter 7 will temporarily delay foreclosure (about four months). This is better for people willing to let go of their homes.
- Chapter 13 will save your home and allow you to pay off your debt through a repayment plan, typically over five years.
While both foreclosure and bankruptcy will negatively impact your credit, filing for bankruptcy can do more harm. Chapter 13 bankruptcy and foreclosure stay on your credit reports for up to seven years, while Chapter 7 bankruptcy stays for 10 years.
Where to get professional help in a foreclosure situation
Never try to navigate a foreclosure alone. These experts can help:
✅ Real estate agents
Contact a real estate agent as soon as you decide to sell your house. Look for one experienced in pre-foreclosure sales and distressed properties. These realtors will know how to price and market your home for a quick sale that gets the most possible value.
✅ Attorneys
A foreclosure attorney isn’t necessary in all situations — say, if you want to live in the home during the process or give it up. But you may want to hire or consult with an attorney if:
- You believe you have a defense against foreclosure and want to keep your home.
- You’re in the military, which comes with special protections against foreclosure.
- The lender is moving forward with the foreclosure while your application for loss mitigation is pending (known as dual tracking).
- You need help with a loan modification or other loss mitigation option.
- You want to file for bankruptcy.
✅ HUD-approved counselors
HUD-certified housing counselors offer independent, expert advice so homeowners can navigate housing issues. They provide free or very low-cost counseling services to help you understand the law and your options. They can also organize your finances and represent you in negotiations with your lender.
Contact a housing counselor as soon as you begin having trouble paying your monthly mortgage payments. HUD counselors are in communities nationwide. Find one near you[15].
Bottom line: Can you sell your house to avoid foreclosure?
In short, yes. Selling your home can be a good way to avoid foreclosure and preserve your credit. But the timing is critical, so the sooner you start this process, the better. The foreclosure process begins after about four months of missed payments, so contact your lender as soon as your financial difficulties start to explore your options. Seek professional guidance from a HUD-certified housing counselor, attorney, realtor, or other expert who can help you find the best way forward.
“If you expect to recover from your financial problems soon, you should contact your mortgage service early and let them know,” says Morgado. “They may offer you a forbearance or loan modification. In the worst case, it is always better to try to sell the property.”
A foreclosure can be highly stressful, both financially and emotionally. But being proactive in finding a solution can lead to a more positive outcome and help you avoid negative consequences, like a hit to your credit score.
FAQs
Can I sell my house after receiving a foreclosure notice?
Yes, you can sell your house after you receive a foreclosure notice. But you’ll need to move quickly, as you only have until the foreclosure sale. In some states, that could be two weeks or less. If you know you won’t be able to catch up, it’s best to start the home sale process after your first missed payment.
Can you stop a foreclosure once it starts?
Yes. A foreclosure doesn’t technically occur until your house sells at auction. Selling the property yourself, getting a loan modification or forbearance, or filing for bankruptcy can stop foreclosure.
How late can mortgage payments be before foreclosure?
About 120 days. “Generally speaking, a homeowner would have to miss four or more payments to enter foreclosure,” said DJ Olojo, a real estate agent and investor. “The process after 2–3 missed payments is called preforeclosure.”
Will I still owe the bank money after a foreclosure?
You might. If the property sells at auction for less than the outstanding mortgage balance, you may have to pay the difference or “deficiency.” This varies by state.
Do you get any money after a foreclosure?
It depends. If your home sells for more than the outstanding mortgage balance, the proceeds will be used to pay late fees, attorney fees, and other accrued expenses. Once these expenses are paid, you may get the leftover proceeds or “surplus funds[3].”
This isn’t automatic, though. You must apply to get the surplus funds through the foreclosure trustee or the court. The exact process and timeline vary by state.
Do I need to tell potential buyers my house is in pre-foreclosure?
No, there’s no requirement to disclose to potential buyers that your home is in pre-foreclosure.
What happens if my house doesn’t sell before the foreclosure date?
If your home doesn’t sell before the foreclosure date, you have options. You can try to refinance the house, seek a loan modification or forbearance, or file for bankruptcy to avoid foreclosure. Otherwise, your bank or lender will take ownership of the property and try to sell it at auction.
