Can You Sell a House in Foreclosure Texas?

Is your house about to be foreclosed upon in Texas,? A foreclosure is the repossession of your house by the bank. It’s also sometimes referred to as a sheriff’s sale. the good news is that you can sell your house while your home is in the process of being foreclosed upon. However, if the house is already in pre-foreclosure, there are specific legal requirements that have to be followed. It is important to note that in Texas, foreclosure can be judicial, non-judicial, or expedited. While the potential of losing your home is alarming, there are things you can do to avoid having a foreclosure in your credit history. In fact, our Southern Hills Home Buyers buys foreclosed homes in Texas for cash, but let’s look at what happens when your bank seeks to take possession of your house.

Selling a House During Foreclosure in Texas

Selling a house during foreclosure in Texas can be a complex and stressful process, but it may be an option to avoid the negative consequences of a sheriff’s sale on your credit report.

Table Of Contents

What Is Foreclosure?

The term foreclosure refers to a legal process where a lender takes possession of a house from a borrower or estate owner who has failed to make their mortgage payments. When the owner of a home fails to make their mortgage payments, the lender has the right to initiate foreclosure proceedings in order to attempt to recover the amount of the loan that is outstanding.
Foreclosure can have serious consequences for the borrower, including damage to their credit score and eviction from their home. Since the owner of the estate will no longer retain the house after the foreclosure, it also results in losing all the equity. It is important for homeowners who are struggling to make their mortgage payments to seek assistance as soon as possible in order to avoid this scenario.

How Does Foreclosure Work in Texas?

Texas has three avenues for foreclosures, including judicial, non-judicial, and expedited foreclosure. It’s important to note that the foreclosure process doesn’t begin until the owner of the home fails to make their mortgage payments.

Non-Judicial Foreclosure in Texas

It’s important to note that non-judicial foreclosures are the most common in Texas. However, in order to start the process of repossessing the house, the lender must have a deed of trust that includes a ‘power of sale’ clause.

Notice of Default – The lender will send the borrower a Notice of Default, which is a legal notice that informs the borrower that they are in default on their mortgage payments and that the lender intends to initiate foreclosure proceedings.
Notice of Sale – If the borrower fails to remedy the default, the lender will send a Notice of Sale, which informs the borrower that the house will be sold at a foreclosure auction.
Foreclosure Auction – The house is listed and sold at an auction to the highest bidder. The proceeds from selling the home will be used to pay off the outstanding mortgage balance. If there are any excess funds, they are returned to the borrower.
Eviction – If the borrower does not vacate the house voluntarily after the home is sold, the lender can obtain a ‘writ of possession’, which allows them to legally evict the borrower from the house.

Judicial Foreclosure in Texas

A judicial foreclosure occurs when the financial institution files a civil lawsuit against the estate owner. In order to sell the house, they must get a judgment in their favor. It’s important to note that judicial foreclosures in Texas are extremely rare. After the financial institution gets the judgment in its favor, the sheriff’s sale process is similar to that of a non-judicial foreclosure.

Expedited Foreclosure in Texas

Expedited foreclosures in Texas are quasi-judicial, meaning they fall between a judicial and non-judicial foreclosure. Properties that have home equity loans, reverse mortgages, or liens by HOAs must first get a judgment in their favor before foreclosing and selling the home. Once the financial institution has the judgment, the process of foreclosing on the home is similar to that of a non-judicial foreclosure.

The Process of Selling a House in Foreclosure in Texas

The estate owner must move quickly to sell the home if it goes into foreclosure. This is because the process can start as soon as the borrower misses the first mortgage payment. Once that payment is missed, the clock starts. Once three payments have been missed, the homeowner will receive a Notice of Default. This notice officially begins the sheriff’s sale process in Texas, and it may arrive with a lawsuit notification. At this stage, the estate owner will enter what is known as pre-foreclosure. It’s during this time that homeowners should make every effort to sell the house if they’re going to try and sell it.

Get an Appraisal – If you want to sell a home during a foreclosure, the first step is to get an appraisal in order to determine the market value of the property.
Set an Asking Price – Based on the appraisal and other factors such as the condition of the property and the local real estate market, set a realistic asking price for the house.
Speak with Your Lender – Before selling your home, it is important to speak with your lender and inform them of your plans to sell the house. This will also give you the opportunity to negotiate with the lender to try and resolve any outstanding mortgage payments or negotiate a short sale.
Choose How to Sell the Home – There are several ways to sell a house during foreclosure, including selling the house on your own, working with a real estate agent, selling the house at a foreclosure auction, or finding a cash buyer for the home. Each option has its advantages and disadvantages, and it is important to consider which option is best for your individual situation.
Negotiate an Offer – Once you receive an offer on the house, it is important to negotiate with the buyer to come to a mutually agreeable price. This may involve multiple rounds of negotiations.
Inform Your Lender That You Have a Buyer – After you have accepted an offer on the house, inform your lender that you have a buyer and provide them with the details of the sale.
Close the Sale – Lastly, close the sale. This involves signing the necessary paperwork, transferring ownership of the property to the buyer, and collecting the proceeds.

Obstacles When Selling a Home in Foreclosure in Texas

When trying to avoid a sheriff’s sale of your property, you may face some obstacles in Texas

Lack of time – Once the homeowner receives the Notice of Default, they may have as little as 20 days to pay the defaulted amount and bring the mortgage current. Once those 20 days have passed, the homeowner will receive the Notice of Sale. This typically includes the date of the foreclosure auction, which must be at least 21 days in the future. It’s important to note that the 21 days starts the day the notice was mailed, not the day the homeowner receives it.
Limited Equity – If the homeowner owes more on the mortgage than the house is worth, they may not be able to sell the home for enough cash to pay off the outstanding balance.
Liens and Other Debts – The home may have additional liens or debts associated with it, such as property taxes, that need to be paid off before the sale can proceed.
Title Issues – There may be title issues with the property, such as a clouded title or competing claims to ownership, which can complicate the sale.
Finding a Buyer – Selling a home before a sheriff’s sale can be challenging, and finding a buyer who is willing to purchase the property in a short amount of time can be difficult.
Negotiating With the Lender – The homeowner may need to negotiate with the lender to try and resolve any outstanding mortgage payments or negotiate a short sale, which can be a complicated process.
Legal and Financial Complexities – Selling a home during a foreclosure can involve a range of legal and financial complexities, such as navigating the foreclosure process, negotiating with the lender, and complying with state and federal laws.

Other Options That Don’t Involve Selling the House

If you’re not keen on selling your home during a foreclosure, you do have other options. You can try for a loan modification, refinance your home, get a deed in lieu of foreclosure or short-sell your home.

Loan Modification

A loan modification is a change to the terms of your loan that can make the mortgage more affordable and manageable so that you can keep up with your payments. This can include reducing your interest rate, extending the loan term, or changing the type of loan you have for your mortgage.

Refinance Before Foreclosure

Refinancing involves replacing your existing mortgage with a new mortgage that has better terms, such as a lower interest rate or longer repayment term.

Get a Deed in Lieu of Foreclosure

You can voluntarily transfer the ownership of your home to the lending institution that holds your mortgage. When you choose this way to deal with the sheriff’s sale of your home, it’s a deed in lieu of foreclosure.

Short Sale

A short sale involves selling your home for less than the outstanding mortgage balance, with the lender agreeing to accept the proceeds as full payment for the loan.

Texas Foreclosure Resources

If you’re a Texas homeowner who’s about to have their home foreclosed upon, there are resources available that can help you navigate the process.

Is Auctioning Your Texas House A Good Idea

Call a HUD Approved Housing Agency – The US Department of Housing and Urban Development offers foreclosure avoidance counseling via approved agencies. To find an agency near you in Texas, check out their webpage.
Know the Law – Read up on foreclosures and processes in Texas at the Texas State Law Library’s website.
Learn About Foreclosures – Learn about foreclosures in Texas and find help at Texas Law Help.
Contact a Texas, Texas Lawyer – Visit an attorney listing website like Justia, or contact an individual attorney, like those at Leinart Law Firm, Silberman Law Firm LLC, or The Lane Law Firm.

Selling a House in Foreclosure in Texas Common Questions

How long does it take to foreclose on a house in Texas?

Under Texas law, the foreclosure process typically begins when the lender files a notice of default, which must be sent to the borrower at least 21 days before the foreclosure sale. The foreclosure sale itself usually takes place on the first Tuesday of the month following the expiration of the 21-day notice period.

In total, the foreclosure process in Texas can take as little as 60 days from the time the notice of default is filed to the foreclosure sale. However, if the borrower contests the foreclosure or files for bankruptcy, the process can be delayed and take longer to complete.

How do I stop a foreclosure auction immediately in Texas?

If you want to stop the foreclosure process and subsequent auction immediately, you have several options.

Reinstate the Loan – You can stop a foreclosure auction by paying off the entire outstanding balance on your mortgage, plus any late fees or other charges before the foreclosure sale takes place.
File for Bankruptcy – Filing for bankruptcy can stop a foreclosure sale immediately under an automatic stay, which prohibits lenders from continuing any foreclosure proceedings.
Request a Loan Modification – You may be able to stop the foreclosure sale by negotiating a loan modification with your bank or lending institution.
Sell the Property – If you are unable to stop the foreclosure sale through any other means, selling the property before the foreclosure sale takes place can stop the sale and allow you to avoid the negative consequences of foreclosure.

Does Texas have the right of redemption after foreclosure?

Texas does have a right of redemption after foreclosure, but the specifics of the redemption period can vary, depending on the specific circumstances of the foreclosure. With that being said, the right of redemption in Texas allows a homeowner to reclaim their property after a foreclosure sale by paying the full amount of the winning bid, plus any additional fees or charges associated with the sale. It’s important to understand that there may be a time limit in which you can exercise your right of redemption.

Is it possible to sell my home if I’ve missed my last few mortgage payments?

If you get behind on your mortgage, you still have the option of selling your Texas home. However, if you are behind on your mortgage payments, you may have less equity in your home, which can make it harder to sell your house for a profit. If your bank has already started the foreclosure process, selling your home may be more complicated. However, you can talk over the possibility of a short sale with your lender, which is selling your home for less than the remaining balance left on your mortgage.

Easiest Way to Sell a House in Foreclosure in Texas

When you need to sell your home quickly due to a foreclosure, it is possible. We will buy your Texas home in cash, even if you’ve already been served with a Notice of Default and are currently in the pre-foreclosure stages. Selling your home for cash is the fastest and easiest way to sell your home if you’ve defaulted on your mortgage. When you sell to us, there’s no need to make any repairs to the house. We’ll buy your Texas home in its current condition. We are interested in buying real estate throughout Texas, including in Houston, Dallas, Fort Worth, Austin, San Antonio, El Paso, Arlington, and other cities.

About Southern Hills Home Buyers

We are a cash home-buying service that can help you through this major life change. Our business is built on buying properties for cash in their as-is condition. We assure you that we will make a competitive cash offer, and you can bypass the expense and hassle of the sales process through a real estate agent. You do not need to go by the book to sell your home on your own or through an agent in order to achieve the results you need. We have bought many homes throughout Texas, and we are interested in buying your property.