Question to Realtors: Can you list a house in Pre-Foreclosure?

[Michael Gayer Jr]

Total Newbie Question:

To Realtors:  Can you list a house in Pre-Foreclosure?  If it is prior to Auction date with time for default to cure still?

Thank you in advance,

Mike

[Christopher Brainard]

@Michael Gayer Jr

1) It depends.

Typically the bank will require the seller to list the house with a realtor on the MLS to obtain an offer. Once the seller accepts an offer (from you or someone else), that offer will be taken to the bank. The bank can then accept the offer or counter. Once you have the response from the bank, you can evaluate the deal to determine if it is worth doing or not. The down side is that this can take quite a long time and you'll have EMD tied up during this period. A friend of mine equates this to buying a lottery ticket. Sometimes the bank sends you a price worth buying at, but many times not.

While most banks will require the above process, smaller banks may also deal directly with you and the seller. The last deal I had the bank ordered a BPO and based their offer on that. Even though the bank stands to avoid realtor fees, I don't recall this option being preferential to buying a short sale off the MLS and was a lot more work for me (as the buyer).

2) Sure - but if the house has lots of equity, most sellers are smart enough to list their house and sell it on the open market. Even if they way until close to the foreclosure date, many banks will grant an extension to allow for a real estate agent to market the property. If you do find one close to the sale, you may be able to swoop in and pick it up for a nice cash discount or structure a JV deal where you pay off the bank fees and obtain equity in the house. I would be careful with the later though, I've had issues in the past working with an owner that occupies the property that needs to be sold. Once the bank is caught up, their motivation to move is going to be limited.

-Christopher