What is a Pre-foreclosure?

This question comes up a lot with clients and I'd like to delve into the answer. A pre-foreclosure is where an owner has missed making as little as one mortgage payment on a home, which starts the foreclosure process with the bank the owner owes a mortgage to. This was especially relevant in distressed times like the recent Covid19 quarantine period where many homeowners lost their jobs and could no longer afford their mortgage. Most of these homes were not actually for sale or available to be seen as missing one mortgage payment doesn’t mean a home is actually for sale.

Why do these homes appear to be for sale in Zillow?

The pre-foreclosure process is started as soon as a homeowner misses a mortgage payment. Unfortunately, that information is part of the public record (creepy huh?) and the legal notification that a mortgage payment has been missed is used by Zillow and other home search portals as part of their advertising business model to get you - the internet browser - to click on an advertising agent’s information for an inquiry on the home. There is no due diligence by these companies to ascertain the accuracy of information or even figure out whether or not a payment has truly been missed as, in reality, these sites are advertising sites and their main goal is to get as many eye balls on their website as possible regardless of whether that information is accurate. A client of ours knocked on the door of a pre-foreclosed home where an irate homeowner hadn’t missed a payment. Instead, a mortgage refinance snafu had caused the process to start.

How do I find out if the home is actually for sale? The quickest way to confirm whether a pre-foreclosed home is actually for sale is to cross-reference the home’s address on our website home search portal to confirm it’s for sale in the MLS, where we get our information on almost every home for sale, distressed or otherwise. You can "search by address" on our home page 24 hours a day! If a home in a distressed foreclosure or short sale status is available for viewing and sale we can definitely walk you through the process of viewing and purchasing a distressed home which will require patience, decisiveness and cash. If history repeats itself: each distressed home, sale process and procedures will be unique; plus you’ll be up against investors and house flippers looking to make a quick buck. If it isn't listed for sale on our site or the MLS then typically that means it's not actually for sale and available to see; rather it's still in pre-foreclosure status and may not come on the market for sale for years, if ever.