What is a Pre Foreclosure?
Have you ever seen a website advertise a “pre-foreclosure” list and wondered what exactly is a “pre-foreclosure” list? Is it a short sale or some sort of limbo right before a foreclosure? Can you buy the home before it hits the market or can this information help you get a leg up on the competition? If you look up the term “Pre-foreclosure” you will most likely find the following definition; “foreclosure is a specific legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the>collateral for the loan.” Note the word Pre- was not mentioned.
Well, if a foreclosure is what happens when a lender takes over a home due to the borrower defaulting then a Pre Foreclosure” must happen right before a bank takes over a home right? WRONG.
Being in “Pre Foreclosure” is like having a “pre-cold” or being “pre-drunk”. There is really is no such thing. So then what exactly are you getting in a “pre-foreclosure“ list?
Let’s start with what you are most likely seeing in a “pre-foreclosure” list. For decades lenders have published lists of all delinquent borrowers. Websites like Realtytrac
have made a business model out of tracking distressed borrowers and reselling this information to the public. This information is readily available to anyone that would like to pay a monthly subscription (btw, if you really want to get into the distressed property buying game Realtytrac is the website I would recommend). For the most part you are seeing folks that might be behind on their mortgage.
So, now that you know who is behind on there mortgages what do you do with this information? Well, in many cases homeowners fall behind a month or two and then quickly catch up. Lenders are also much more inclined to work with borrowers than they were just a few years ago. Recent real estate studies show that the Northern Virginia area especially locations like Ashburn, Leesburg, Reston and Gainesville are at or near all time lows for foreclosures and short sales.
You get the jest right, “pre-foreclosure” is really "pre"- nonsense. So, then why are so many websites offering this information online? I once heard someone say that the secret to capturing potential customers online is to continually build a “better mousetrap”. I guess offering “pre-foreclosure” lists are the next best mousetrap. Avoid the trap and consult your local professional Realtor about buying or selling your next home( including foreclosures and short sales).
Want up to date real-time lists of homes for sale in our area (including short sale and foreclosures)? Checkout my website! It is has direct feed from our local Multiple Listing Service (MLS).
*Referrals are a large part of my business. For you and your family and friends–Always 4 1/2% listings for sellers and cash back at settlement for buyers–all with full and complete professional real estate service.
Serving all of your Ashburn, Chantilly, Fairfax, Herndon, Reston, Leesburg, Mclean and Loudoun County area Real Estate needs.