Can someone help me understand Pre-Foreclosures?

7 Replies

There seems to be a lot of Pre-Foreclosures in my area. And with prices so ridiculously high right now, they seem to be the only ones in my price range. However, my Realtor has told me I can’t buy them. Anyone available to give me the short explanation of why?

TYI

I assume you are looking at Zillow pre-foreclosures. Zillow reports these publicly to get buyer leads to sell to agents. They are not actually for sale.

Originally posted by @Minna Reid :

I assume you are looking at Zillow pre-foreclosures. Zillow reports these publicly to get buyer leads to sell to agents. They are not actually for sale.

Yeah, Zillow is riddled with them in my area as well, and I suspect pretty much everywhere. It means the owner has missed one of their mortgage payments, right? But not necessarily going to be moving into foreclosure?

Originally posted by @Jason Pedersen :
Originally posted by @Minna Reid:

I assume you are looking at Zillow pre-foreclosures. Zillow reports these publicly to get buyer leads to sell to agents. They are not actually for sale.

Yeah, Zillow is riddled with them in my area as well, and I suspect pretty much everywhere. It means the owner has missed one of their mortgage payments, right? But not necessarily going to be moving into foreclosure?

No not if they missed a payment, lenders do report this on an individual property basis. Its generally either a Notice of Default or Lis Pendens has been filed with the county, and Zillow flags these. So the borrower is typically 120+ days at this point.

 

This is something I've been trying to understand as well. So if I see a pre-foreclosure on zillow, I understand that the owner isn't necessarily trying to sell it. But if I were interested in buying it, I assume I could just try to reach out to the owner directly and try to buy it from them. Is that a strategy any of you have tried? Are there any obstacles to being able to buy from someone in pre-foreclosure like this? It seems like it would be a good way to try to get a motivated seller and put in an offer on the house before it goes to auction.

Originally posted by @Dan Sargis :

This is something I've been trying to understand as well. So if I see a pre-foreclosure on zillow, I understand that the owner isn't necessarily trying to sell it. But if I were interested in buying it, I assume I could just try to reach out to the owner directly and try to buy it from them. Is that a strategy any of you have tried? Are there any obstacles to being able to buy from someone in pre-foreclosure like this? It seems like it would be a good way to try to get a motivated seller and put in an offer on the house before it goes to auction.

it's a very hit and miss (Mostly miss) endeavor if you are reaching out to people based on a Zillow label.  Yes, there are potential obstacles. You could be held liable for foreclosure consulting, whether that is your intent or not if you are in an area that has rules about foreclosure consultants.

“Preforeclosure” is really a misnomer....a property has either has foreclosure Filed or it has Already been foreclosed on and auctioned off. 
What you are seeing as Preforeclosures are the former. Zillow does not legally have acces to “missed payment” loans. And yes, Everybody is going for these and some states have laws about approaching them.