Maryland Short Sales & Foreclosure Alternatives: A Step-by-Step Guide

Behind on Your Mortgage or Facing Foreclosure in Maryland? You May Have More Options Than You Realize.

If you are behind on your mortgage payments, facing foreclosure, worried about losing your home, or owe more than your property may be worth, you are probably searching for one thing:

What can I do now?

You may be months behind on your mortgage. You may be receiving letters and phone calls you do not fully understand. You may have received a foreclosure notice or learned that a foreclosure sale could be approaching.

You may be wondering:

  • Can I still sell my house if I am behind on mortgage payments?
  • Can I sell my house before foreclosure in Maryland?
  • How can I avoid foreclosure?
  • What are the alternatives to foreclosure?
  • What happens if I owe more than my house is worth?
  • Do I need a short sale?
  • Should I accept a cash offer from an investor?
  • Is it already too late to do anything?

You may have more options than you realize.

I’m Dan McDevitt, a Baltimore-area Distressed Property Specialist and President of RealVolution Homes Group at Cummings & Company Realtors. I have been licensed since 2004, have more than 20 years of real estate experience, and have handled more than 150 short sales.

For much of my career, I have helped homeowners navigate difficult property situations involving missed mortgage payments, properties facing foreclosure, short sales, homes worth less than the mortgage balance, and other complicated real estate problems.

One of the most important things I have learned is this:

The first step is not assuming you have to sell. The first step is understanding your situation and the options that may still be available.

I’m Behind on My Mortgage. What Should I Do?

One of the most common things I have seen over the years is homeowners waiting because they are scared, embarrassed, stressed, or overwhelmed.

They feel like they are drowning.

The letters keep coming. The missed payments keep adding up. They may be afraid to answer the phone or open another envelope because they do not know what to do.

Unfortunately, ignoring the situation usually does not make it easier.

The sooner you understand the facts, the sooner you can begin understanding your options.

Some of the first questions to consider include:

  • How many mortgage payments have you missed?
  • Approximately how much do you owe?
  • What is your home realistically worth today?
  • Do you have one mortgage or multiple mortgages?
  • Are there other liens, judgments, HOA balances, or condominium fees?
  • Have you received a Notice of Intent to Foreclose or other foreclosure documents?
  • Has a foreclosure action already begun?
  • Is a foreclosure sale scheduled?
  • Does the property need significant repairs?
  • Is the property owner-occupied, tenant-occupied, or vacant?
  • What outcome are you hoping to achieve?

You do not need to know all the answers before asking for help.

The purpose of gathering this information is to understand the entire situation before deciding what to do next.

A homeowner with significant equity may have very different real estate options from a homeowner who owes more than the property is worth.

A homeowner who recently missed a payment may be in a very different position from someone with an approaching foreclosure sale.

Every situation is different.

Can I Sell My House If I’m Behind on Mortgage Payments?

In many situations, yes.

Being behind on your mortgage does not automatically prevent you from selling your home.

The first step is understanding the numbers:

What is the property realistically worth?

Approximately how much is owed against it?

Are there additional liens or other amounts that may need to be addressed?

If the property can be sold for enough to satisfy the mortgage and other obligations associated with the sale, a traditional sale may still be possible.

Depending on the property, timing, condition, and your goals, potential real estate sale strategies may include:

  • A traditional sale on the open market
  • An as-is sale
  • An investor or cash offer
  • A short sale when the property cannot realistically sell for enough to satisfy the amounts owed

The right answer depends on the facts.

The goal should not be to automatically choose the fastest option. The goal should be to understand the available options before time and circumstances make the decision for you.

Can I Sell My House Before Foreclosure in Maryland?

Depending on where you are in the foreclosure process, selling the property may still be possible.

However, time matters.

The further the foreclosure process progresses, the less time there may be to market the property, obtain an acceptable offer, address title or lien issues, obtain any necessary approvals, and complete settlement.

That is why one of the first things I want to understand when speaking with a homeowner facing foreclosure is:

Where are we in the process right now?

From the real estate side, we need to evaluate:

  • The property's current market value
  • The approximate mortgage balance
  • Any additional liens or claims against the property
  • The condition of the home
  • The amount of equity, if any
  • The realistic time needed to sell
  • Whether the property may require a short sale

Foreclosure is a legal process. If you need legal advice regarding your rights, deadlines, foreclosure defense, bankruptcy, or other legal matters, you should consult a qualified Maryland attorney.

My role as a real estate professional is to help you understand the property and potential real estate sale options.

What Are the Alternatives to Foreclosure in Maryland?

There is no single foreclosure alternative that is right for every homeowner.

Depending on your circumstances, options may involve your mortgage servicer, a HUD-approved housing counselor, an attorney, or the sale of the property.

From the real estate side, possible sale options may include the following.

Traditional Sale

If your property has enough equity and sufficient time remains to complete a sale, selling on the traditional real estate market may be an option.

This may provide broad exposure to buyers and, depending on the property and market conditions, may help maximize the sale price.

Selling the Property As-Is

You may not have the money, time, or ability to make repairs before selling.

That does not necessarily mean the property cannot be sold.

An as-is sale may allow you to market the property in its current condition without completing extensive renovations first.

Investor or Cash Offer

If speed, convenience, or the condition of the property is a major concern, an investor or cash offer may be worth considering.

But homeowners facing foreclosure are often heavily marketed to by investors.

The first cash offer you receive is not automatically your only option—or your best option.

Before accepting an investor offer, it can be helpful to understand the property's realistic market value and compare the potential outcomes of different sale strategies.

Short Sale

If the amount owed against the property exceeds what the property can realistically sell for, a short sale may be an option in some circumstances.

A short sale is more complex than a traditional real estate transaction and may require approval from the applicable mortgage lender, servicer, or other lienholder.

What Is a Short Sale?

A short sale generally occurs when a property is sold for less than the amount necessary to fully satisfy the mortgage debt or other amounts owed against the property, requiring approval from the applicable lender or lienholder to accept less than the full amount due.

A short sale is not simply a homeowner deciding to sell the property cheaply.

The property still needs to be:

  • Evaluated
  • Priced appropriately
  • Marketed to potential buyers
  • Placed under contract
  • Presented through the appropriate short-sale process
  • Approved by the necessary parties
  • Taken through settlement

The exact process can vary depending on:

  • The mortgage servicer
  • The type of mortgage
  • Whether there is more than one mortgage
  • Other liens against the property
  • The homeowner's circumstances
  • The property's market value
  • The condition of the property
  • The stage of any foreclosure proceeding
  • The terms of the buyer's offer

I have handled more than 150 short sales during my real estate career, including transactions involving conventional mortgages, FHA-insured loans, VA-backed loans, and reverse mortgage.

I Owe More Than My House Is Worth. Can I Still Sell It?

Potentially, yes.

Many homeowners assume that if they owe more than their home is worth, they simply cannot sell.

That is not necessarily the case.

If the mortgage balance and other amounts owed exceed the property's realistic market value, a traditional sale may not generate enough money to satisfy everything owed.

Depending on the circumstances, a short sale may be one option worth exploring.

The first step is understanding:

  1. What is the property realistically worth?
  2. Approximately how much is owed?
  3. Are there additional mortgages or liens?
  4. What condition is the property in?
  5. Has foreclosure started?
  6. How much time may be available?

Until those questions are answered, it is difficult to know what real estate options may be available.

The Maryland Short Sale Process: Step by Step

Every short sale is different. Mortgage servicers, loan programs, liens, property conditions, and homeowner circumstances can all affect the process.

However, the real estate side of a Maryland short sale generally follows several stages.

Step 1: Understand the Homeowner’s Situation

Before rushing to put the property on the market, it is important to understand the complete situation.

Information that may be relevant includes:

  • Property address and ownership
  • Whether the property is occupied, rented, or vacant
  • Property condition and repairs needed
  • Number and type of mortgages
  • Approximate mortgage balances
  • Date of the last mortgage payment
  • Any previous loan modifications or forbearance agreements
  • Foreclosure notices or scheduled foreclosure dates
  • HOA or condominium information
  • Other known liens or judgments
  • Bankruptcy, divorce, probate, or estate issues that may affect the property
  • The homeowner's goals and timeline

Preparation matters.

A distressed property should not automatically be treated like a routine home sale.

Step 2: Evaluate the Property and the Numbers

The property needs to be evaluated based on its:

  • Current condition
  • Location
  • Comparable sales
  • Local market conditions
  • Repair needs
  • Realistic market value

Then the property's estimated value can be compared with the approximate amounts owed.

This helps determine whether:

  • A traditional sale may be possible
  • An as-is sale may make sense
  • An investor option should be considered
  • A short sale may need to be explored

Step 3: Understand the Available Real Estate Sale Options

Not every homeowner who is behind on mortgage payments needs a short sale.

Some homeowners have enough equity to sell traditionally.

Some need to sell as-is.

Some prioritize speed and want to compare investor offers.

Others owe more than the property can realistically sell for and may need to explore a short sale.

The goal is to understand the options before choosing the strategy.

Step 4: Assemble the Right Professionals

A complicated real estate situation may require more than one professional.

Depending on the circumstances, the people involved may include:

  • The homeowner
  • Real estate agent
  • Attorney
  • Title company
  • Mortgage servicer
  • Appropriately licensed loss-mitigation professional
  • Tax professional
  • Bankruptcy attorney
  • Probate or estate attorney

Maryland law regulates certain activities involving foreclosure consulting and loss mitigation. I handle the real estate side of the transaction and coordinate with the appropriate licensed professionals when services outside my role as a Realtor are required.

Step 5: Prepare and Market the Property

A short-sale property still needs a serious marketing strategy.

The goal is to expose the property to the market and obtain a legitimate offer from a qualified buyer.

Depending on the property, marketing may include:

  • Professional pricing analysis
  • MLS exposure
  • Online marketing
  • Photography
  • Buyer-agent outreach
  • Investor outreach when appropriate
  • Clear communication regarding the nature of the transaction

A short sale does not mean the property should simply be given away.

The property's market value remains an important part of the process.

Step 6: Receive and Evaluate Buyer Offers

When an offer is received, the terms need to be carefully reviewed.

Important considerations may include:

  • Offer price
  • Buyer financing
  • Cash versus financed offer
  • Inspection terms
  • Settlement timeline
  • Buyer qualifications
  • Short-sale contingencies
  • Other contractual terms

The goal is to identify a buyer who understands the transaction and has a realistic ability to complete the purchase.

Step 7: Enter Into a Contract

Once the seller and buyer agree to the terms, they may enter into a contract of sale.

In a short-sale transaction, the contract may still be subject to the necessary approval of the applicable mortgage lender, servicer, or other lienholder.

The seller's acceptance of an offer and the lender's approval of a short sale are not the same thing.

Step 8: Submit the Required Short-Sale Information

The exact documentation required can vary significantly depending on the servicer, loan type, lienholders, and circumstances.

The appropriate professionals involved in the transaction work to provide the information required for review.

Because Maryland regulates certain loss-mitigation and negotiation activities, those services should be handled by the appropriately licensed professionals.

My role is focused on the real estate transaction, including:

  • Property evaluation
  • Pricing
  • Marketing
  • Buyer communication
  • Contract management
  • Real estate documentation
  • Coordination with the other professionals involved

Step 9: Property Value Review

The lender or servicer may evaluate the property's value as part of its review.

This may involve an appraisal, broker price opinion, or another valuation process.

The property's condition, comparable sales, market exposure, and contract price may all become relevant.

Step 10: Short-Sale Review and Additional Requests

Short sales can involve additional documentation requests and multiple stages of review.

The timeline varies.

One transaction may move differently from another depending on:

  • The servicer
  • Loan type
  • Number of liens
  • Property value
  • Foreclosure status
  • Required documentation
  • Other parties involved

Clear communication and organization are important throughout the process.

Step 11: Receive and Review the Short-Sale Decision

If the short sale is approved, the applicable approval terms should be carefully reviewed by the homeowner and the appropriate professionals.

Homeowners should understand that financial, tax, credit, legal, and deficiency-related issues can vary by situation.

Questions involving those areas should be reviewed with the appropriate qualified professionals.

Step 12: Buyer Financing, Inspections and Closing Preparation

After the necessary approvals are obtained and accepted, the buyer may need to complete:

  • Financing
  • Appraisal
  • Inspections
  • Title requirements
  • Other contractual obligations

The transaction then moves toward settlement.

Step 13: Settlement

At settlement, the property transfers to the buyer according to the approved terms and closing documents.

The exact outcome of every short sale is different.

That is why homeowners should never assume that someone else's short-sale experience will necessarily be identical to their own.

Short Sale vs. Foreclosure: What’s the Difference?

A short sale and a foreclosure are not the same thing.

In a short sale, the homeowner participates in selling the property, and the transaction requires the necessary approvals when the sale proceeds will not fully satisfy the amounts owed.

A foreclosure is a legal process involving enforcement of the lender's rights against the property.

The possible legal, financial, tax, and credit consequences of either situation can vary based on individual circumstances.

Homeowners should seek advice from the appropriate qualified professionals when evaluating those issues.

From the real estate perspective, my role is to help homeowners determine whether selling the property may still be possible and what type of sale strategy may be appropriate.

Should I Accept a Cash Offer If I’m Facing Foreclosure?

Maybe.

But first, understand what you are being offered and what other realistic options may exist.

Homeowners facing foreclosure often receive:

  • Postcards
  • Letters
  • Phone calls
  • Text messages
  • Investor offers
  • “We buy houses” solicitations

Some investor offers are legitimate and may provide a useful solution.

An investor sale may make sense when:

  • The property needs significant repairs
  • The homeowner needs a faster transaction
  • The property is difficult to show
  • The seller wants to avoid repairs
  • Convenience is a major priority

But before accepting an offer, it can be helpful to understand:

  • The property's estimated market value
  • Its realistic as-is value
  • The approximate mortgage payoff
  • Other liens or expenses
  • The estimated outcome of different sale options
  • The time realistically available

I maintain relationships with active investors looking for distressed and as-is properties.

But I also market properties traditionally when that appears to be the better strategy.

The goal is not to push every homeowner toward the same solution. The goal is to help you understand and compare the available real estate options.

Why Experience With Short Sales and Distressed Properties Matters

A distressed property transaction may involve much more than putting a sign in the yard and waiting for an offer.

Potential complications may include:

  • Missed mortgage payments
  • Foreclosure deadlines
  • Multiple mortgages
  • Liens
  • HOA or condominium balances
  • Major repairs
  • Vacant properties
  • Tenant issues
  • Title problems
  • Bankruptcy
  • Divorce
  • Probate or estate issues
  • Reverse mortgages
  • Multiple decision-makers
  • Multiple professionals

I have been licensed since 2004 and have handled more than 150 short sales.

Over the years, one lesson has remained consistent:

The first step is understanding the entire situation—not rushing to put the property on the market.

Frequently Asked Questions About Maryland Short Sales and Foreclosure

Can I sell my house if I am behind on mortgage payments?

In many cases, yes. The appropriate sale strategy depends on the property's value, amounts owed, condition, available time, and other circumstances.

Can I sell my house before foreclosure in Maryland?

Depending on the stage of the foreclosure process and the time available, selling may still be possible.

Can I sell my house after foreclosure has started?

Potentially. However, foreclosure is a legal process, and timing can become critical. A qualified Maryland attorney should be consulted regarding legal rights and deadlines.

How can I avoid foreclosure in Maryland?

There may be different options depending on the homeowner's circumstances. From the real estate side, selling the property before foreclosure or completing a short sale when appropriate may be among the possibilities worth evaluating. Other options may involve the mortgage servicer, a housing counselor, or legal professionals.

What if I owe more than my house is worth?

A short sale may be an option in some circumstances.

Do I have to repair my house before selling?

Not necessarily. Many properties can be sold as-is.

Should I sell my house to a cash buyer?

A cash or investor offer may be a useful option, but it should be evaluated against the property's value, your goals, and other realistic sale strategies.

Is a short sale guaranteed to be approved?

No. Approval depends on the specific transaction and the parties whose approval is required.

How long does a short sale take in Maryland?

There is no single timeline that applies to every transaction. The servicer, loan type, number of liens, foreclosure status, documentation, buyer, and other factors can affect the process.

Can FHA loans be short sales?

FHA-insured loans may have specific requirements and processes that differ from conventional loans.

Can VA loans be short sales?

VA-backed loans may also involve program-specific requirements.

Can a property with a reverse mortgage be sold?

Yes, properties with reverse mortgages can be sold, although the process and available options depend on the mortgage balance, property value, estate circumstances, and other factors.

About Dan McDevitt

Dan McDevitt is a Baltimore-area Distressed Property Specialist and President of RealVolution Homes Group at Cummings & Company Realtors.

Licensed since 2004, Dan has more than 20 years of real estate experience and has handled more than 150 short sales.

His primary areas of specialization include:

  • Homeowners behind on mortgage payments
  • Properties facing foreclosure
  • Foreclosure-related property sales
  • Short sales
  • Probate and estate sales
  • Inherited properties
  • Reverse mortgage property sales
  • Distressed and as-is properties
  • Homes requiring significant repairs or cleanout

Dan works with homeowners, families, personal representatives, attorneys, and investors throughout Baltimore City, Baltimore County, Harford County, Anne Arundel County, Cecil County, Howard County, and surrounding Maryland communities.

If you're dealing with a simple home sale, there are plenty of agents who can help.

If you're dealing with a property situation that isn't simple—that's where Dan comes in.

Behind on Your Mortgage or Facing Foreclosure? Start by Understanding Your Options.

You do not need to have everything figured out before asking questions.

If you are behind on mortgage payments, facing foreclosure, worried that you owe more than your property is worth, or simply do not know what to do next, the first step is understanding the situation.

You may have more options than you realize.

Dan McDevitt
Distressed Property Specialist
RealVolution Homes Group at Cummings & Company Realtors
Serving Baltimore and Central Maryland