What you need to know about the pre-foreclosures in our market.
Foreclosures can be a scary topic for anyone looking to buy a home or invest in real estate. If you’ve been perusing real estate websites, you may have come across properties labeled as “pre-foreclosures.” Today, we’ll discuss what pre-foreclosures are and what you should know if you’re considering buying a property in this situation.
What is a Pre-Foreclosure?
A pre-foreclosure is a notice filed on a property triggered by a default in payment. When someone can’t make their mortgage payments, the lender files a notice of default, which is recorded with the county or state. This notice is a public record and indicates that the homeowner is in danger of foreclosure. Pre-foreclosures are not necessarily homes that are currently on the market for sale. Instead, they indicate that the homeowner is behind on payments, and the property could soon be foreclosed.
What Happens After a Notice of Default is Filed?
After a notice of default is filed, the homeowner typically has several options to avoid foreclosure. They may work out a payment plan with the lender or try to refinance the mortgage. The homeowner may also sell the property to pay off the outstanding debt. If none of these options work, the lender will move forward with a trustee’s sale.
A trustee’s sale is a public auction where the property is sold to the highest bidder. If the property doesn’t sell at the auction, the lender takes ownership of the property and it becomes a bank-owned or REO (Real Estate Owned) property. At this point, the lender will typically hire a real estate agent to sell the property on the open market.
Are Pre-Foreclosures a Good Investment Opportunity?
While pre-foreclosures may seem like an opportunity to purchase a property at a discounted price, they are not always a good investment. In most cases, homeowners will find a way to avoid foreclosure, and the property will never be sold. Additionally, banks typically hire real estate agents to sell their REO properties, which are available on the open market to everyone. There is no guarantee that you will be able to purchase a pre-foreclosure property, and even if you do, it may not be at a significant discount.
The Current State of Foreclosures
The number of foreclosures has decreased significantly since the housing crisis of 2008-2010. The ongoing appreciation of home values has helped many homeowners avoid foreclosure. While there are still some foreclosures happening, they are much less common than they were a decade ago.
While pre-foreclosures may seem like a good investment opportunity, they are not always available for sale, and there is no guarantee of a significant discount. It’s crucial to work with a qualified real estate agent to navigate the foreclosure process and find the right investment opportunity for your needs. If you have any questions, don’t hesitate to reach out to us by phone or email. We look forward to hearing from you.
