Pre-foreclosure | What Can It Do For The Owner And Potential Buyers
Home buyers are attracted to homes in pre-foreclosure because their selling value is often substantially lower than their market value. Aside from the fact that a buyer can buy the home at a discounted price, there is often little to no competition compared to multiple offers for other types of properties on the market.
Those properties are usually hot and crowd the popular listing sites. And because of lowered or discounted price, most buyers, especially those without experience, will choose cheaper mainstream houses without proper probing or thorough research. But before you get all excited to run out and snap up some great discounted properties, you need to know… the pre-foreclosure process isn’t as simple sounding as it is being advertised.
Why Houses Undergo Pre-Foreclosure
When a homeowner gets behind on several mortgage payments, the lender has the right to start the foreclosure process. It is not necessary for a foreclosure notice to be filed in public record, however, the notice of default will become a public record. Even with a default notice, the owner still has the option to make mortgage payments until such time that the payment becomes current.
However, if the homeowner remains in default without making any effort to bring the past due amount current, eventually the property will be foreclosed upon, and they get evicted. The house will be repossessed by the bank and will become a Real Estate Owned (REO) property.
Bank-owned houses offer great deals to home buyers because most banks want to sell repossessed properties right away. They’ve already spent so much on the foreclosure process, selling these properties as soon as possible will help them get back some of their investment, and do away with the hassle of maintaining the house.
Pre-Foreclosure vs. Short Sale
It”s a common misconception to say that pre-foreclosure is the same as a short sale. Although both include selling a home, there is a vast difference between these two.
“Pre-foreclosure means an owner is greater than 90 days late on payments and lender has started the foreclosure process with a notice of trustee sale. While in a default status, an owner often isn’t ready to sell and move,” says Kevin Sucher, a realtor at Prudential Northwest Properties in Portland, OR.
While Cathy Baumbusch, a realtor at Re/Max Allegiance explains that, “Short sales are listed by a broker. In a short sale, the seller may wait months to receive an answer from the bank, and the bank may end up saying no, but will likely get the opportunity to have an inspection.” Find the professional explanation here.
When the lender or bank agrees to sell the house for a lower price, taking a loss, the property can be listed for sale right away. However, not all sellers are behind on payments. Some would choose to sell their home fast in Houston to relocate or move into a new place more suitable to their lifestyle. So, not all short sales fall under pre-foreclosure. At SellAnyHouse, we cater to homeowners in need of a fast sale, especially those who do not want to lose their homes due to several missed payments.
How Should Buyers Choose
Now that we’ve laid out the clear difference between the two, buyers have the option to choose which type of house could give them a better discount with lesser risks.
Both foreclosures and short sales present home buyers with a unique opportunity. Not only are these properties often sold at a discount, but the buying process can be more streamlined since the owner or lender wants a quick resolution.
However, just as with any other home, it’s important for buyers to make sure their investment is worth it. This means having the property inspected by a professional home inspector, especially since the majority of foreclosed properties are sold “as is.”
For individuals looking to speed up the home buying process even further, property auctions provide a great way to purchase foreclosed and short sale properties in a very short time frame. Not only do auctions offer the certainty of a target sale date, they also provide a level of transparency and straightforwardness that can be missing in other forms of home buying.
On the other hand, there is a growing alternative method in the real estate market that doesn’t require hiring and paying for a realtor. SellAnyHouse.com, a home buying company, has been servicing the Houston community for years, offering a practical and speedy solution to anyone who wishes to get away from a sticky situation.
We buy houses in Houston, TX in exchange for a fair cash offer. Learn more about us today and don’t miss the opportunity in Houston to sell my house fast!