Five Towns Real Estate ? The Truth About Pre-Foreclosures ? Five ...

One question I have been asked a lot recently is ?What is a pre-foreclosure?. They found a house on one of many sites?that give consumers this information.? Just because a home is in pre-foreclosure does not mean that it is currently, or will ever be, for sale.

Pre-foreclosure simply means that a homeowner has fallen behind on their mortgage payments.??Though it is possible that a foreclosure may eventually happen, at the current time, the home is still owned by the homeowner.??Pre-foreclosure does NOT mean that the home is available for sale.??In fact, that home may never be available for sale.

Here are the potential outcomes of a pre-foreclosure situation:

• The homeowner gets caught up on their mortgage payments.
• The homeowner refinances or does a loan modification to make the payments more affordable.
• The homeowner tries to sell the home to avoid foreclosure.??In this case, there are a few options:

1. If the homeowner has enough equity, they can list with a Realtor? and try to sell it for market value.
2. ?If the homeowner has negative equity, what is called being underwater, they will try to have the bank approve a short sale and then list with a Realtor to sell the home for them and help them through the short sale process.
3. The homeowner may try to sell it themselves as a FSBO (For Sale By Owner).??If the home has negative equity, selling it as a For Sale by Owner is very risky as the successful completion of a short sale requires specific skills and knowledge.

• The bank eventually forecloses on the property (a foreclosure can take several months to a few years to complete).??Upon completion of the foreclosure process, the house goes to the steps and is auctioned.??If no one bids high enough, the bank will be the highest bidder and take ownership of the property.

At some point after the foreclosure, the bank may list the home for sale.??Many banks are holding a high level of foreclosure inventory to wait for higher prices and to avoid flooding the market and thereby protecting their assets.

The bank will make the decisions on when to sell a property and at what price to sell it for.??Sometimes, a bank will price the home under market value to get it off their books quickly.??Other times, the bank will get market value or close to it if the home is in good condition and a desirable location.

So even though a ?pre-foreclosure? may sound like a terrific opportunity, a buyer is better off concerning themself with properties that are actually available for sale.

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Source: http://findyourhomeli.com/real-estate-information/pre-foreclosur/

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