Can You Sell a House If You Are Behind on Payments? Learn Your Options.

Yes, you can sell a house if you are behind on payments, but it’s important to act quickly and understand your options. Whether you’re facing temporary financial hardship or longer-term struggles, selling your home could help you avoid foreclosure and protect your credit.

In this Redfin Real Estate article, we’ll explain how to sell a house when you’re behind on mortgage payments, your options, and what to watch out for during the process.

What happens when you fall behind on mortgage payments?

Falling behind on mortgage payments typically triggers a series of events:

• 30-60 days late: You’ll receive notices from your lender and may incur late fees.
• 90+ days late: The lender may begin the foreclosure process.
• Pre-foreclosure: The home is at risk of foreclosure, but you may still be able to sell it.

The earlier you act, the more control you have over the outcome. 

Can you sell your house before it goes into foreclosure?

Yes, selling your house before foreclosure is not only possible, it’s often the best way to avoid damage to your credit. This is known as a pre-foreclosure sale. You can use the proceeds to pay off the mortgage and potentially walk away with equity.

Here’s how it works:

1. Get a payoff amount from your lender.
2. List the home with a real estate agent or FSBO.
3. Pay off the mortgage balance and any closing fees.

If your home is worth more than what you owe, you can sell it and keep the difference.

What if you owe more than the home is worth?

If you’re underwater on your mortgage (you owe more than your home is worth), you might consider a short sale. A short sale allows you to sell the home for less than you owe, with lender approval.

Short sale requirements:

• You must prove financial hardship.
• Your lender must agree to accept less than the owed amount.
• The process can take longer than a traditional sale.

While a short sale will affect your credit, it’s often less damaging than a foreclosure.

Pros and cons of selling while behind on payments

Pros:

• Avoid foreclosure
• Protect your credit score
• Potentially walk away with equity
• Peace of mind

Cons:

• Less time to prepare or maximize value
• May need lender approval (especially for a short sale)
• Possible tax implications if debt is forgiven

Steps to sell a house if you’re behind on payments

1. Contact your lender

Let them know you intend to sell. They may delay foreclosure proceedings if you’re actively trying to sell.

2. Get a payoff amount

Request a formal payoff statement that includes missed payments, fees, and interest.

3. Determine your home’s market value

A Redfin real estate agent or appraiser can help assess whether a traditional sale or short sale is best.

4. List the home quickly

Time is critical. Consider pricing competitively to attract serious buyers fast.

5. Disclose your situation

Some buyers are more flexible with timelines if they know you’re in financial distress.

Alternatives to selling

If you want to keep your home, consider: loan modification, mortgage forbearance, refinancing, or renting out your home. Talk to your lender to explore these options before deciding to sell.

Final thoughts

You can sell a house if you’re behind on payments, but time is your biggest asset. Whether you pursue a traditional sale or a short sale, acting early gives you more control, better outcomes, and a stronger financial future.

If you’re unsure what to do, speak with a trusted real estate agent or financial advisor to explore your options and avoid foreclosure.

FAQ

Does being behind on payments affect the selling process?

It can speed up the timeline and limit your options, but you can still sell, especially if your home has equity.

Will I owe money after selling my home if I’m behind on payments?

If your sale price doesn’t cover the full amount owed, you may need lender approval for a short sale, and you might still be responsible for the difference unless it’s forgiven.

Can I sell my home myself if I’m behind on mortgage payments?

Yes, you can sell FSBO (For Sale By Owner), but working with a real estate agent experienced in distressed sales may help you close faster and avoid legal pitfalls.

How fast can I sell my house to avoid foreclosure?

With the right price and marketing, you could sell in a matter of weeks. Cash buyers or investors may offer quicker closings, though often at a lower cost.

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