Can you sell a house in foreclosure in Arizona?

Yes. In Arizona you can sell your house right up until the trustee's sale takes place. Until that sale, you still own the house, and an owner can sell.

Falling behind starts a process. It doesn't take the house away. Selling is one of the things that can end that process: when the sale closes, your lender is paid off from the proceeds and there is no longer a debt to foreclose on.

This guide covers how foreclosure works in Arizona, how late is too late, whether you keep any money, and what to do if you owe more than the house is worth.

How foreclosure works in Arizona

Most Arizona home loans are secured by a deed of trust, so foreclosure usually happens outside of court through a trustee's sale. The rules are set out in Arizona law, and the dates that matter are printed on the notice you receive.

1. You fall behind on payments.Under a federal rule, your mortgage servicer generally can't start the foreclosure process until you are more than 120 days behind. That stretch is the best time to look at every option.
2. A notice of trustee's sale is recorded.The trustee records the notice with the county recorder. A copy must be mailed to you within five business days of recording. The notice gives the sale date, time and place.
3. The notice is posted and published.It must be posted on the property at least 20 days before the sale, and published in a local newspaper once a week for four weeks.
4. You can still reinstate.You can stop the sale by paying what is past due, plus the allowed costs and fees, until 5 p.m. on the last business day before the sale.
5. The trustee's sale.The sale can't happen sooner than the 91st day after the notice was recorded. It takes place on a business day between 9 a.m. and 5 p.m. Once the house sells at that sale, the window to sell it yourself has closed.

From the day the notice of sale is recorded, you have about three months before the earliest possible sale date. That is enough time for a cash sale and sometimes for a listing, but not if you wait until the last few weeks.

How late is too late to sell?

The deadline is the trustee's sale itself. It isn't the missed payment, the first letter or the day your lender stops returning calls. Until the trustee's sale happens, you can still sell.

The real problem is usually arithmetic, not the law. A listed sale needs photos, showings, an offer, the buyer's loan approval, an appraisal and an inspection. That often takes two to three months when nothing goes wrong. If your sale date is a few weeks away, a listing may not finish in time.

Two things work in your favor. Ask your lender, in writing, whether it will postpone the sale if you have a signed purchase agreement. And start on a sale while you are still talking to the lender about a modification, not after the modification falls through.

Do you keep any money?

That depends on your equity, meaning what the house is worth minus everything owed on it.

When there is real equity in the house, selling before the sale date is almost always the better outcome.

What if you owe more than the house is worth?

Then a normal sale can't close on its own, because the price won't cover the payoff. There are two usual paths.

• A short sale. Your lender agrees to accept less than the full balance so the sale can close. It is common, but it needs the lender's approval, which takes weeks and isn't guaranteed. It works best with time on the clock.
• Bringing the difference to closing. If the gap is small, some owners pay it to close cleanly rather than go through a foreclosure.

Before agreeing to a short sale, ask two questions: will the lender release you from the remaining balance in writing, and how will any forgiven debt be treated at tax time. A housing counselor or an attorney can help with both.

Selling to a cash buyer during foreclosure

A cash sale isn't the right answer for everyone. It is worth understanding because it removes the two things most likely to make a sale miss its deadline: the buyer's financing and the buyer's repair requests.

• No buyer's lender. No loan approval, appraisal or underwriting to wait on.
• No repairs, cleaning or showings. The house sells as it is.
• You choose the closing date. The timeline is mostly the title work, usually a matter of weeks.
• You won't get full market value. A cash offer reflects the repairs and the risk the buyer takes on. What you gain is speed and certainty.

If you have equity and enough time, listing with an agent may net you more, and we'll tell you so. If the date is close, certainty often matters more than the last few dollars.

With us, you sign a purchase agreement with Russ Buys Houses. We either close ourselves or assign the agreement to one of our investor partners, who closes on exactly the same price and date. You get that in writing before you sign.

What to do this week

1. Find your date. If you have a notice, the sale date is on it. Work backward from that date.
2. Ask your lender for a full payoff figure. Not your balance, but the full amount including missed payments, fees and costs.
3. Get a realistic as-is value. What the house would sell for today, in its current condition.
4. Subtract. Value minus payoff tells you whether you're looking at a normal sale or a short sale.
5. Talk to a HUD-approved housing counselor. There may be options on your loan you haven't been offered.

Questions sellers ask