The short answer is yes
If you've fallen behind on your mortgage and received a notice from your lender, the first question I usually get is whether it's even legal or possible to sell the house at this point. It is. Pre-foreclosure is the period after you've missed payments and your lender has started the default process, but before the home has actually gone to auction or been taken back by the bank. As long as you still hold title to the property, you have the legal right to sell it, and doing so during this window is one of the most effective ways homeowners get out from under a foreclosure before it happens.
I've worked with a number of Hampton Roads homeowners in exactly this spot, and the relief that comes from having a plan, instead of just waiting for the next letter from the servicer, makes a real difference. Selling doesn't erase the fact that you missed payments, but it can stop the process before it becomes a foreclosure on your credit report and, depending on your equity, put money back in your pocket instead of walking away with nothing.
Why timing matters so much here
Every lender and every loan type handles the foreclosure timeline a little differently, and how much runway you have depends on your servicer, your loan type (conventional, FHA, VA), and whether you've been in contact with them at all. I always tell people not to assume they know exactly how many days they have left based on something they read online or heard from a friend. A HUD-approved housing counselor or an attorney can look at your specific notice and loan documents and tell you where you actually stand.
What I can tell you is that the earlier you start the sale process, the more options you have. A house that's listed the week a notice of default arrives has a very different set of possibilities than one where the sale isn't even discussed until a sale date has been scheduled. If you're still working through what a notice of default means for you, I've written more on what a notice of default is and what to do next, and it's worth reading before you decide on next steps.
What a traditional sale looks like from here
If you have enough equity in the home to pay off the mortgage balance, any liens, and closing costs, a standard listed sale is usually the best outcome. You get to set an asking price, market the home, and close on a normal timeline, assuming that timeline fits inside whatever window your lender's process allows. The proceeds after the mortgage payoff are yours.
This is where knowing your numbers early really pays off. I usually walk homeowners through a rough net proceeds estimate right away, using our net proceeds calculator, so we're not guessing about whether a sale clears the mortgage or falls short. That single number often decides whether we're talking about a traditional listing or a short sale.
What happens if you owe more than the house is worth
If the mortgage balance is higher than what the home will sell for, a short sale becomes the relevant path. That means your lender agrees to accept less than the full amount owed as payoff, and it requires their approval before closing. It's a more involved process than a standard sale, with financial documentation and a hardship explanation submitted to the lender, but it's a well-established option that many servicers work through regularly.
In most approved short sales, the remaining shortfall is forgiven by the lender as part of the approval, but that's not guaranteed in every case, and it can vary by lender and by whether there's a second mortgage or lien on the property. Get any approval terms in writing before you close, and don't assume anything is settled until it's spelled out on paper.
How selling compares to letting foreclosure happen
A completed foreclosure and a sale during pre-foreclosure, even a short sale, are not the same thing on your credit report or in your future as a borrower. Foreclosure is generally viewed as a more severe event with longer-lasting effects than a short sale, though both are reported and both matter. Selling also gives you some control over the process, the timeline, and in some cases the amount of money you walk away with, none of which you have once a foreclosure sale date arrives.
It's worth being honest with yourself about how much time is actually left. If the house is close to auction, speed becomes the priority, and I've written specifically about how fast you can sell to stop foreclosure if that's where you are.
Selling as-is when there's no time or money for repairs
A lot of homeowners in pre-foreclosure haven't been able to keep up with maintenance either, and the idea of prepping a house for a traditional listing feels impossible on top of everything else. That's a real and common concern, and it doesn't have to be a dealbreaker. There are buyers, including investors, who purchase homes as-is specifically because the seller doesn't have the time, money, or bandwidth to fix things up first.
I cover this in more depth on the distressed properties page, including how an as-is sale process typically works and what to expect for timeline and price compared to a fully prepped listing.
Talk to your lender, don't avoid them
One mistake I see often is homeowners avoiding calls from their servicer because they don't have good news to share. I understand the instinct, but staying in contact with your lender, even just to tell them you're working on a sale, generally works in your favor. It can affect what options remain available to you and how much cooperation you get if a short sale becomes necessary.
A HUD-approved housing counselor can also act as a resource here, helping you understand your notices and communicate with your servicer, at no cost to you. I always encourage people to use that resource alongside whatever real estate help they're getting.
How I help homeowners in this situation
When someone reaches out to me in pre-foreclosure, the first thing we do is figure out where they actually stand: how much time is realistically left, what's owed on the mortgage, and what the home is likely worth in its current condition. From there we decide together whether a traditional listing, a short sale, or a fast as-is sale makes the most sense.
I've been through this process with enough Hampton Roads homeowners to know that the earlier we start, the more choices you have. If you're in pre-foreclosure right now, reach out and let's talk through your specific numbers and timeline before more of that window closes. You can also read more on my pre-foreclosure resources page for a fuller overview of your options.
