Thank you for reading this summary of how to avoid foreclosure in the SF Bay Area, save your credit score, and cash out. If this would help your friend, neighbor, or family member, please print this page and bring it to them. We are not attorneys of course, but we do buy and sell a lot of real estate from people around the Bay Area in all kinds of situations. Our first purchase was in fact a pre-foreclosure purchase — more on that later!
Intro
Buying a house is a big commitment: there’s a lot of emotion involved, and plenty of money at stake.
Like many decisions in life, buying a house is an emotional decision. This is perfectly fine. We make decisions based on emotions everyday from the mundane (what to eat) to the extraordinary (what do I want to achieve in my limited time on Earth?). Buying a house is somewhere in between.
I think it’s safe to say that most of us feel very happy and excited to buy our first house. It’s a season in our lives rich with possibilities! How will we decorate and organize our home? Shall we paint the bathroom and living room a very light pastel robin’s egg blue? What kinds of fruit trees can we plant to start harvesting apples, apricots, avocados?
Selling your house is often an emotional decision too, and that’s in good times. This is also a time of new possibilities. You’re moving onto a better place to live – smaller or larger, near or far, with or without children or pets or a partner.
But what if you’re suddenly facing foreclosure due to missed payments, unpaid HOA fee liens, temporary job loss, huge medical bills, divorce, drugs, debt, or any other reason — whatever the reasons behind your late payments, you are probably feeling very stressed.
As bad as it may feel right now, how you are feeling right now is a normal response. How you respond to the situation is 100% within your control, even if you don’t think so yet.
Where You Are Today
This foreclosure situation will probably be a minor blip along the journey of your entire lifetime… Foreclosure does not define you. You actually have several choices for how to handle foreclosure (before it happens) and they’re actually pretty simple!
Short Story: How We Helped an Elderly Family Avoid Foreclosure
Meet Sandy and Frank – names changed for privacy. Sandy relied on her husband to handle all financial and real estate matters, but passed away a decade ago. Her son Frank is mentally not fully competent or lazy; we are not sure which. Luckily, our elderly clients have a trusted family friend who is very alert and knows which way is up.
My business partner Max and I contacted homeowner Sandy at her hoarder house in the East Bay in June 2019. After assessing the situation, we decided that it would be best and easiest for our clients to sell their hoarder house and relocate to a clean, new mobile home in a mobile home community nearby. We presented our offer to Sandy with her trusted family friend present, and they agreed that it would be a smart idea to cash out of the large, but impossible to maintain house, then use their windfall of cash to buy a mobile home nearby.
We closed escrow a couple weeks later in July while simultaneously sourcing a suitable replacement home for Sandy and her son. It’s August 2019 now and the family is now happily living in a more suitable living situation, not dealing with health hazards of their own making, and with plenty of money left over for home upgrades, a vacation to Texas and Florida, and paying off medical bills.
Reminders: You Probably Already Know How to Avoid Foreclosure
- Obviously: Keep your house payments current
- Buy a house that is well within your budget, with “rainy day” cash reserves in case of temporary income loss
- Or… live somewhere you love and lease the house for less than a mortgage.
- Also Obviously: Increase your income, cash out savings, or borrow money
- Get your house payments up to date. Here are a few ways:
- Work more hours. This is obtainable, but not sustainable. You can’t donate your kidneys (or blood) too many times either!
- Bring on a roommate or two with a traditional yearly or six-month lease. You’ll very likely make enough money here to increase your revenues and avoid foreclosure! But: choice #3 increases your cashflow much more.
- Create 1-2 AirBNB rooms to bring in additional income (in the San Francisco/ San Jose Bay Area, that could be an extra $1,500 per room per month!)
- If you need help and guidance doing this, let us know, or visit our How-To-Create-an-AirBNB Resource Page.
- This works best if you are a “people person” since you will be dealing with international travelers, corporate employees, traveling nurses, and likely tourists too.
- I highly recommend options 2 or 3 vs working more hours at your day job, or driving for Lyft/Uber/Doordash/Postmates.
- You’ll earn way more money renting your house, with probably less stress and certainly in less time, even with extra home insurance or cleaning fees (DIY tip: change the sheets and clean the bathrooms yourself to earn a bit more!)
- This also works in a master lease situation. You likely can’t W-2 wage yourself out of foreclosure, unless you can clone yourself. If you can clone yourself, drop us a note so we can try this too!
- Get your house payments up to date. Here are a few ways:
- Sell your house on market for with a Realtor(R) or do a For Sale By Owner (FSBO)
- This works if your house in great, sellable condition and,
- You have AT LEAST two to three months of time to spare before getting a Notice of Recision or Notice of Default (1-2 months to prep/sell, 1 month to close escrow with the new buyer)
- Sell your house off market to an all-cash buyer (Investor) immediately who will assume the risk involved with renovating your house for sale on market
- Perfect when: you DON’T have enough time to sell on market, or
- Perfect when: your house is NOT in sellable condition (for whatever reason: too much junk, heavy repairs needed, the roof has gaping holes and is leaking, excessive animal dander, structural issues…)
- Get your MONEY within 2-10 days!
- Sell your house off market to an investor and sign a lease option contract.
- You sign a contract, guaranteed with a one-time payment, to hold the house for you to buy later (save and keep your house!)
- The investor assumes your property taxes and mortgage payments for you and saves the house for you to re-buy later, assuming your payments are current and you easily get a new job again, which is very possible
- You pay rent for less than the mortgage, but slightly higher than the average rents in your area
- Declare Bankruptcy (Chapter 7 or 13) and default on most of your creditors EXCEPT your house
- The Worst Option: Don’t sell your house. Here, you wait for it to go on sale at a courthouse auction to the highest bidder. This is actually your worst choice because you’re giving up control and getting the LEAST MONEY IN YOUR POCKET.
- Waiting for the inevitable and NOT MAKING A CHOICE is a choice. It’s a terrible choice! You deserve better.
- You’re probably agonizing over the unknown and uncertainty, every day, until the auction.
- You don’t have control of this situation, unless that’s your choice. Not making a choice is also a choice, so this is the default result unless you choose choices 1-6 above
- Sometimes cash buyers collude and conspire to pay the LEAST money for your house, since they legally aren’t allowed to inspect it fully before bidding
- After auction, the court will pay off all your creditors first (mortgage lender, lien holders, credit card companies, medical professionals…)
- After your creditors are repaid, the court and county take their share of fees too!
- After an unknown amount of time, you will finally get any money left over! But how much? And when? It could be months later. Good enough for government work!
- This is the least helpful choice of the 7 that you have, unless you enjoy feeling bad about yourself and complaining to everyone how bad your life is. As you know, that is not actually helping you, unless you are simply seeking attention.
- There are so many other ways to feel good! And you have plenty to be grateful for right now, even in your current situation.
- Focus on what you are grateful for instead of what you’re anxious, depressed, or stressed about.
Of all these scenarios, ideally you’d be in situation #1 right? (No missed payments.)
What Shark Fin Properties Can Do To Help You Avoid Foreclosure, Cash Out, and Save Your Credit
Imagine if we could help you wave a magic wand over your house payment difficulties, using the best choices available above or otherwise, and help you take care of your problems this week? Shark Fin can get you back to option 1, or at least closer to it.
Our Foreclosure Avoidance Process
- Send us your property info and contact info
- We research your property
- We provide you a fast, fair all-cash offer
- After accepting our offer, you receive:
- less stress
- no debt
- good credit
- CASH in your bank account in 7-14 days. Sometimes sooner/later.
Shark Fin is not a real estate law firm, so we suggest consulting a solid real estate attorney or bankruptcy attorney to go over all your options. If you don’t have time, money, or energy to do that, we understand. What we’ve written on this page is not a 100% exhaustive list of options, and we don’t provide any guarantee or warranty for the information here. However, it is a great common sense guide.
If you are interested in selling your pre-foreclosure house to us for FAST CASH in 1-2 weeks, we can help you:
- fix your foreclosure problems (saving your credit)
- get out of debt (saving your credit)
- pay off your creditors (saving your credit)
- reduce your stress and worries
- help you get back on your feet!
Foreclosure is not the end of your world. You have MANY options as shown above, and probably more that are not listed. Good luck!