Yes, you can avoid foreclosure by selling your home. Selling your home is typically better for your money situation and your credit than letting it go into foreclosure. Most homeowners have about 120 days before foreclosure begins, giving you time to explore selling options that can save your credit and protect any home equity you’ve built.
This guide covers everything you need to know about using home sales to avoid foreclosure, including timing strategies, different selling options, and steps to take right now if you’re facing financial hardship.
Understanding Your Foreclosure Timeline
When Does Foreclosure Actually Start?
According to theConsumer Financial Protection Bureau, the legal foreclosure process can’t start until you are at least 120 days behind on your mortgage. This gives you a crucial window to act before things get worse.
Here’s what typically happens:
Days 1-30: You miss your first payment. Your lender will contact you by phone and letter.
Days 30-60: Late fees pile up. Your lender calls more often to discuss payment options.
Days 60-90: Your loan goes into default. You may receive a breach letter explaining how to cure the default.
Days 90-120: Pre-foreclosure period continues.Federal mortgage servicing laws require the servicer to contact you to discuss foreclosure alternatives, called “loss mitigation” options, no later than 36 days after a missed payment.
Day 120+: Legal foreclosure process can begin.
Colorado-Specific Timeline
In Colorado, the process works a bit differently. Colorado’s non-judicial process allows for a quicker resolution, typically within about 145 days. Once the foreclosure starts:
- Notice of Election and Demand: Filed with the public trustee
- 110-125 days: Time until foreclosure sale
- Right to Cure: Colorado homeowners have a unique opportunity known as the “Right to Cure.” This allows homeowners to bring their mortgage current up to 15 days before the scheduled foreclosure sale
Why Selling Beats Foreclosure Every Time
Credit Score Protection
Foreclosure destroys your credit score. Your credit score will tank (usually by at least 100 points) and stay low for several years (up to seven). Selling your home, even in a tight timeline, protects your credit from this massive hit.
Keep Your Equity
When you sell your home yourself, you keep any money left over after paying off your mortgage. In a foreclosure, the lender takes ownership of the property and auctions it to pay off the rest of the loan. You, the homeowner, will be evicted from the property and will not make a penny from the auction.
Avoid Deficiency Judgments
In many states, in addition to losing your home in foreclosure, you also may be responsible for paying a “deficiency judgment.” That’s the difference between what you owe and the price the home sells for at the foreclosure auction. Selling prevents this additional debt.
Future Home Buying
You may have to wait at least seven years to get another mortgage after foreclosure. Selling your home keeps your options open for buying again much sooner.
Your Selling Options When Facing Foreclosure
Traditional Sale
This works best if you have equity in your home and time to sell.
Requirements:
- You need to have enough equity in the home to cover paying off the mortgage loan balance plus the expenses involved with the sale
- Usually takes 30-60 days to complete
- Works well if foreclosure is still months away
Benefits:
- Highest sale price
- Full control over the process
- Time to prepare your home for sale
Cash Home Sales
Perfect for urgent situations when foreclosure is approaching quickly.
How it works:
- Get an offer within 24-48 hours
- Close in 7-14 days
- Sell as-is without repairs
- No agent commissions
When to choose this option:
- Less than 60 days until foreclosure sale
- Home needs major repairs
- Can’t afford to wait for traditional buyers
Short Sale
When you owe more than your home is worth.
What it means: With a short sale, you are responsible for finding a buyer for your home. You’ll need approval from your mortgage servicer to complete a short sale and have the difference between the sale amount and your outstanding loan balance forgiven by your servicer.
The process:
- Find a buyer willing to purchase below market value
- Get lender approval for the reduced payoff
- Complete sale with lender’s agreement
Taking Action: Your Step-by-Step Plan
Step 1: Calculate Your Situation
Figure out your numbers right now:
- Current mortgage balance
- Monthly payment amount
- How many payments you’ve missed
- Your home’s current market value
- Costs to sell (usually 6-10% of sale price)
Step 2: Contact Your Lender Immediately
It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. Many lenders prefer to work with you rather than go through expensive foreclosure proceedings.
Ask about:
- Loan modification options
- Payment plans
- Forbearance programs
- Timeline before foreclosure starts
Step 3: Get Professional Help
HUD-Approved Housing Counselors: TheU.S. Department of Housing and Urban Development provides free housing counseling nationwide. Call toll free (800) 569-4287 to find a housing counselor near you. These services are free and can help you understand all your options.
Real Estate Professionals: Find agents experienced with distressed sales or contact cash buyers who specialize in quick closings.
Step 4: Explore All Selling Options
Get multiple options on the table:
Traditional listing: Contact 2-3 real estate agents for market analysis and timeline estimates.
Cash buyers: Get offers from reputable cash home buying companies for comparison.
Short sale specialists: If you’re underwater on your mortgage, find agents experienced with short sales.
Step 5: Choose Your Best Option
Consider these factors:
- Time until foreclosure
- Your home’s condition
- How much equity you have
- Your financial goals
Special Considerations for Colorado Homeowners
Colorado Foreclosure Protection Act
The Colorado Foreclosure Protection Act was created in 2006 because: “Unfortunately, too many homeowners in financial distress, especially the poor, elderly, and financially unsophisticated, are vulnerable to a variety of deceptive or unconscionable business practices designed to dispossess them or otherwise strip the equity from their homes”.
This law provides extra protections when selling during foreclosure, including:
- Required disclosures
- Cancellation rights
- Protection against equity stripping
Available Assistance Programs
Colorado Emergency Mortgage Assistance Program (EMAP): The Colorado Emergency Mortgage Assistance Program (EMAP) offers financial assistance to eligible Colorado homeowners facing foreclosure.
Denver Foreclosure Financial Assistance Program: Homeowners in Denver whose household income is at or below 80% of the area median income and meet other requirements can get financial assistance from the Foreclosure Financial Assistance Program.
Colorado Foreclosure Hotline: Call (877) 601-4673 for free assistance and resources.
Red Flags: What to Avoid
Foreclosure Rescue Scams
Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or aHUD-approved housing counselor will provide free.
Warning signs:
- Upfront fees before services
- Pressure to sign quickly
- Promises to stop foreclosure immediately
- Requests to sign over your deed
Unrealistic Promises
Be wary of anyone who:
- Guarantees to stop foreclosure
- Asks you to stop communicating with your lender
- Wants you to make payments to them instead of your lender
- Pressures you into quick decisions
Protecting Your Future
Document Everything
Keep records of:
- All communications with your lender
- Payment attempts and confirmations
- Professional advice received
- Sale-related paperwork
Understand Tax Implications
Selling your home might have tax consequences:
- Forgiven debt may be taxable income
- Capital gains considerations
- Consult a tax professional for guidance
Plan Your Next Steps
Think about:
- Where you’ll live after the sale
- Rebuilding your credit
- Future homeownership goals
- Emergency fund planning
Current Market Reality
According to a report by ATTOM Data Solutions, in the first quarter of 2025, one in every 1,515 homes in the United States had a foreclosure filing. The good news? Many current homeowners have low, fixed-rate mortgages (meaning they have affordable monthly payments) and a good amount of home equity. So, they could sell the home and walk away with some money if they get into financial trouble.
This means you’re likely in a better position than homeowners during previous foreclosure crises. Homeowner equity in the U.S. is estimated at over $35 trillion, serving as a financial buffer against widespread foreclosure risks.
Getting Started Today
If you’re facing foreclosure, time is your most valuable resource. Here’s what to do right now:
- Call your lender today – Don’t wait for the situation to get worse
- Get your home valued – Know what you’re working with
- Contact a HUD counselor – Free professional guidance
- Explore quick sale options – Get cash offers for comparison
- Review all assistance programs – You might qualify for help
Remember: An average of less than 1% of homeowners sell their previous homes to avoid possible foreclosure. Don’t become a statistic. Take action now to protect your financial future.
Final Thoughts
Avoiding foreclosure by selling your home is not just possible—it’s often the smartest financial move you can make. Whether you choose a traditional sale, work with a cash buyer, or pursue a short sale, selling gives you control over the situation and protects your future.
The key is acting quickly and getting professional guidance. If you’re having trouble paying your mortgage, don’t wait for a notice of default. Take the following steps right away to figure out a plan of action.
If you’re in Colorado and need to sell your house quickly to avoid foreclosure,we can help. We buy houses in any condition and can close in as little as 7 days, giving you the speed you need to avoid foreclosure while still protecting your credit and equity.
Don’t let foreclosure destroy your financial future. Explore your selling options today and take control of your situation. The sooner you act, the more options you’ll have available.