Can I sell if I am behind on payments?

Being behind on a mortgage does not remove your right to sell the property. You still own it, and until a foreclosure sale actually completes you can generally market it like any other home. What changes is the timetable and, if you owe more than the house is worth, who else has to agree.

Almost everything turns on one question, so it is worth answering it before anything else: is the property likely to be worth more than what is owed on it?

If there is equity: an ordinary sale

If the likely sale price covers the mortgage balance, the arrears, and the costs of selling, this is an ordinary sale. The lender does not need to approve the price, because they are being paid in full at closing. The arrears are settled out of the proceeds, and anything left over is yours.

This is the outcome worth checking for first, and it is more common than people assume — particularly for anyone who has owned the property for a while, since arrears build over months while equity has often been building for years.

The constraint is time rather than permission. A sale takes as long as it takes, and if a sale date has already been set the calendar may be shorter than a normal marketing period.

If you owe more than it is worth: a short sale

If the likely price will not cover what is owed, selling generally requires the lender to accept less than the full balance. That is a short sale, and the important word is "generally" — it needs their approval, and approval is neither automatic nor quick.

Expect it to take longer than a standard sale. The lender will usually want to see a hardship explanation, financial documentation and a realistic offer before deciding, and buyers have to be willing to wait through that. It works best when there is still meaningful time before any key date.

When selling is the wrong answer

Selling is not automatically the right move, and it is worth being direct about that on a page written by someone who lists houses for a living.

• If the hardship was temporary and income has returned, a repayment plan or modification may keep the home — which is usually what people actually want.
• If you can raise the arrears in one payment, reinstating the loan may resolve the situation without selling at all.
• If the equity is thin, the costs of selling can consume most of it, and you may end up with the disruption of a move and little to show for it.
• If you have not yet spoken to the servicer about workout options, you do not have enough information to know that selling is the best of them.

What to work out first

Three numbers make this decision much clearer: the current payoff figure from your servicer including arrears and fees, a realistic sale price rather than an optimistic one, and the approximate costs of selling. Together they tell you which of the two paths above you are actually on.

A market valuation is free and commits you to nothing. So does a conversation with a HUD-approved housing counsellor, who advises homeowners at no cost, has nothing to sell, and is independent of your lender and of us. If you want an unbiased second opinion on whether to sell at all, that is where to get it.