Yes, in Illinois, you can sell your home during foreclosure as long as your lender(s) agree and it is before the sheriff’s sale (also known as foreclosure sale or auction). After the sheriff’s sale, the lender’s attorney needs to go back to court and ask the judge to approve the sale. This is called confirmation of sale. Theoretically, you could sell your home after the sheriff’s sale and before confirmation of the sale, but most lenders (or lienholders) are not able to do anything after the sheriff’s sale.
There are two major ways you can sell your property during foreclosure.
The first way is a regular sale.
In a regular sale, you pay all of your lenders everything you owe them, pay all standard closing costs and give the buyer a clear title. The only difference between a regular sale and a regular sale during foreclosure is the payoff you need from your lender(s). When you property is in foreclosure, to clear title, you will need a payoff from your lender(s) that specifically states that once they receive the full amount they need they will dismiss the foreclosure case. In some situations, if the lender’s payoff does not have the right language, the title company will accept some form of written acknowledgment from the lender’s foreclosure attorney that they are aware of the payoff and will dismiss the case once directed to do so by their client (your lender).
The second major way is a short sale.
A short sale is when you sell your property for less than you owe. The short part refers to the payoff to your lender(s). The most critical step in a short sale is having your lender approve the Buyer’s offer (in writing including all closing costs and fees). Getting this approval can take anywhere from 30 days to 6 months and sometimes even longer. Once you receive written approval from all of your lenders, you can schedule the closing. In most situations, the closing must occur before the sheriff’s sale.
Selling your home during foreclosure can be very complicated. If you are attempting to do this, it is always best to work with a local real estate broker and attorney that are both familiar with your particular geographic area and are experienced with short sales and foreclosures. With the right team in place, you can sell your home during foreclosure and either recover that last bit of equity or hopefully not owe the bank any more money.
Disclaimer: This blog post is for informational purposes and is not intended to be legal advice or to create an attorney-client relationship. Every situation is unique and it is always best to review your individual situation with a local attorney to understand your options.