Can You Sell a House in Foreclosure in NY? Your Options Explained
Sometimes homeowners can find themselves getting behind, and that can mean the bank starts the foreclosure process. This can be the beginning of an often overwhelming period, and many New York homeowners assume the beginning of foreclosure means the end of their options. However, this isn’t always necessarily the truth. In many cases, you’re still able to sell a house in foreclosure and use that sale to stop or even resolve the process.
If you’re facing foreclosure and feeling stuck, you’re not alone. Tons of homeowners across the state find themselves in this exact predicament every year. A foreclosure is kind of like a lake-effect snowstorm, the impact isn’t always immediate, but it quickly builds in severity. With the right information, you’ll be ready to make the smartest decision for your property and situation. You’ll be able to move on quickly.
Can I Legally Sell My Home After a Lis Pendens Is Filed
Yes, in most cases, you’re still allowed to sell your home after a lis pendens is filed. A list pendens is a critical public notice altering buyers and lenders that a foreclosure action is underway. It won’t automatically mean you’ve lost ownership of the property, or the right to subsequently sell it. Until a foreclosure sale or sheriff’s sale is complete, you typically still hold title to the home.
However, selling at this stage does mean there are some additional considerations. A buyer will see the lis pendens during a title search, which means the foreclosure needs to be resolved to successfully close the home sale. Usually, things like the loan balance and the legal fees are tied to the foreclosure proceedings and must be paid off at closing. If the sale price won’t cover the full amount owed, it may require the bank to agree to a short sale. The possibility of a short sale will always depend on the mortgage and the specific approval criteria for that bank.
On top of that, timing will always be a crucial factor. With foreclosure proceedings moving forward, deadlines will tighten substantially. Talking with real estate attorneys or a specialized foreclosure attorney can help you better prepare for the process. They can also help you avoid unnecessary legal action and decide if selling is still a feasible route, going forward.
7 Steps to Selling a House During NY’s Judicial Foreclosure
Since New York relies on a judicial foreclosure system, the timeline for a foreclosure is often much longer than people expect. This extra time can mean real opportunities, but you have to know what options are on the table. Here, we’ll go over a step-by-step walkthrough of what matters most.
1. Verify Your Case Status and Index Number
First, you’ll need to start by finding out where your foreclosure proceedings stand. The Empire State assigns every foreclosure an index number that’s been filed with the county clerk. Your index number tells you whether the foreclosure notice has been issued, if there’s a judgment pending, or if a foreclosure auction date has already been set. Knowing where your case stands is the best way to get ahead of potential surprises and to know what’s still ahead.
2. Attend the Mandatory Settlement Conference (CPLR 3408)
Most owner-occupied homes in New York state qualify for a mandatory settlement conference. The settlement conference is a meeting that gives you the chance to explore loss-mitigation options before the case proceeds. Lenders might review loan modification requests or similar alternatives during this meeting. This is also the point where many homeowners choose to work with a housing counselor. A HUD-approved housing counselor or HUD-certified housing counselor can help with paperwork preparation and understanding your options.
3. Request a Full Payoff Statement (Include Legal Fees)
Before listing or accepting any offers, you’ll need to get a full payoff statement from the lender. This shows what would be needed to satisfy the loan. This includes missed mortgage payments, accrued interest, and even legal fees tied to the foreclosure process. Comparing this to your expected sale price can give you important insight into whether a standard home sale will work or if a short sale is needed.
4. Calculate Equity: Cash Sale vs. Short Sale
Now, take a look at your home equity. Looking at recent local sales can help you ballpark what your market value is in the current real estate market. If your value is more than what you owe, a cash sale or traditional sale may cover it. If the numbers don’t line up, though, you may find that a short sale is a better option if the bank will approve it.
5. Hire a NY Real Estate Attorney (Mandatory)
In New York, a real estate attorney isn’t optional. The good news is that they are a huge help in the process. They’ll be on hand to review contracts and coordinate with the lender, while making sure the attorney for the other side of the foreclosure is following the proper procedure.
6. Secure a “Sure Thing” Cash Buyer
When you’re under a time crunch, certainty matters more than squeezing every possible dime out of the sale. A cash buyer or local real estate investor will often buy the property as-is, and they can close faster than other sale options. Not only that, but they usually don’t need any kind of inspections or repairs, so they can cut delays and contingencies out entirely. Some homeowners look to iBuyers, but compared to cash buyers, iBuyers typically need more time, and they’re notorious for hidden fees and changing their offers.
7. Pay Off the Loan and Stop the Auction
Once the sale closes, the loan payoff is sent to the lender, and the foreclosure sale is stopped. This prevents the auction or sheriff’s sale from moving forward. If everything is handled on time and correctly, the judicial foreclosure ends with a home sale. This gives you a clean break and a chance to move on without the stress and credit damage of a foreclosure and auction sale
Fill Out The Form Below And Sell Your Foreclosed House In One Simple Step
The NY Foreclosure Timeline: How Much Time Do You Really Have?
We’ve mentioned that the New York judicial foreclosure system works a little slower than other states. This process can take months, and in some cases, even longer. Much of the timeline will depend on case specifics and the county in which the case is filed.
Early on, you’ll get a foreclosure notice and other court filings, like a Notice of Default. These explain the action being taken and may outline the upcoming milestones. From there, the case moves through various steps of the court process. This includes steps like settlement conferences and court reviews. Here, homeowners still have the option to list with a real estate agent and complete a home sale.
Once the court has a judgment of foreclosure, things move more quickly. A sale or auction may be scheduled, and deadlines are harder to extend. In some situations, there may be a redemption period, but not in every case, and not in every county.
Can the Bank Sue You After?
Many homeowners worry about what happens when the home is sold or put up for auction. In New York, lenders do have the option to pursue a deficiency judgment if the sale price doesn’t cover the debt. That can include unpaid principal, interest, and legal costs, so it’s important to know what to expect.
In some cases, this risk can be reduced or altogether avoided. Some sales can include a waiver of deficiency as part of the lender’s agreement. This is common in negotiated short sales. In other cases, surplus funds may be available if the property sells for more than what’s owed.
Homeowners facing deeper financial turbulence may find that other financial tools can help. In some cases, filing bankruptcy can help stop collection efforts while still allowing you to sell your house. Both Chapter 7 and Chapter 13 bankruptcy create an automatic stay.
Why “Bob Will Buy It” is Your Fastest Exit Strategy in New York
When the foreclosure timelines get shorter, speed and certainty matter more than just about anything else. A traditional home sale has a tremendous time cost, along with contingencies and more. Selling as-is to a local buyer gets rid of nearly every hurdle in your way. There’s no need for repairs, so you can stop stressing about deferred maintenance. Funding is cash, so there’s no dealing with a lender or delays due to credit score or credit reports.
Finally, there’s no match for deep, local experience. Homeowners in Orange County and Dutchess County often benefit from working with buyers who already know how these local systems operate. When time is tight, a straightforward home sale with fewer moving parts can be the most reliable way to move forward.
Frequently Asked Questions About NY Foreclosure
Can I live in my house during the foreclosure process in NY?
In most cases, yes. Until a foreclosure sale or sheriff’s sale is completed, homeowners are usually allowed to remain in the property. You’re still responsible for basic upkeep, utilities, and avoiding damage to the home during this time.
How long does a judicial foreclosure take in New York?
Judicial foreclosure in New York often takes longer than people expect. The process can stretch out due to court schedules, settlement conferences, and legal review. That extra time is often what allows homeowners to sell before an auction happens.
Is it possible to sell my house to a family member to avoid foreclosure?
Yes, it is. That said, the sale must be legitimately conducted and documented accordingly. The lender still expects the loan to be paid off, or otherwise approved via short sale. Trying to transfer ownership without settling that debt can lead to legal problems. The best thing to do is speak with your lender to learn about all your potential options.
Conclusion
Selling a house in foreclosure in New York doesn’t have a one-size-fits-all roadmap. Some homeowners have enough time to try a traditional listing, but most don’t. Some try for a lender-approved short sale, and some want a faster solution. What matters most is that you understand your own timeline and the options that fit within it. If you’re looking for a clear, straightforward plan to move on, Bob Will Buy It buys homes all across the Empire State. Reach out today to take the next step.
Get Your Free, No-Obligation Cash Offer!
Don’t wait anymore. Fill out the form below and join the growing number of homeowners who have sold their foreclosed house with us in the most simple and stress-free way.
At Bob Will Buy It, we buy houses in New York for cash and in as-is condition, even if you’re facing foreclosure! Falling behind on payments does not mean that everything is already said and told. Our team can help you sell your house fast and stop the foreclosure process in its tracks, relieve the financial pressure, and help protect your credit score. We work directly with homeowners, lenders, and attorneys to ensure the whole process is simple, compliant, and timely. There are no repairs, no agent fees, and no delays. If you need to sell a house fast to avoid foreclosure, Bob Will Buy It is ready to make a fair cash offer today. Call now to learn more: 845-475-0900