As we approach the holidays, we are seeing inventory tighten and homes that have not sold yet are being taken off the market. Whenever there is a decrease in homes on the market, I always get asked about Zillow’s pre-foreclosures. As you search for homes on Zillow, you are bound to come across a pre-foreclosure. Pre-foreclosures can be a great opportunity are a bit different than an active home on the market.
The best away to explain these pre-foreclosures is to understand the foreclosure process in metro Denver. Arapahoe county has a great timeline of the foreclosure process here. The process may differ from county to county but this is a great visual of the process.
When the homeowner’s mortgage becomes delinquent, the first step to start the foreclosure process is for the Lender to file a Notice of Election and Demand. This notifies the homeowner the mortgage is delinquent and they have until a certain date (110-125 days) to bring it current or foreclosure proceedings begin. This is when it becomes public record and is updated on Zillow. Therefore, when you see it on Zillow it is not on the market, the homeowner has just been notified that foreclosure proceedings make start if the mortgage is not brought up to date.
If you are interested in a pre-foreclosure home, there are a few things to note:
- These homes are not on the market and to view on of the homes, your agent needs to reach the homeowner directly. This might be accomplished by a card, knocking on the front door, etc.
- This can be a very emotional process for the homeowner. Typically, an unforeseen situation has occurred to get to this spot, such as, losing a job, medical bills, etc.
- This process can be VERY competitive. Pre-foreclosures can be very appealing to investors trying to make money on flipping the home. You may find yourself competing for the home with investors that are willing to pay cash and provide a housing solution to the homeowner once they sell (hiring a moving company to move the homeowner or even paying for a year’s rent for them).
- The process is not the shortest. Often, homeowners in this situation will attempt to avoid it for as long as they can. The lender and the county will not want to foreclose and the homeowner has up to 15 days before the foreclosure sale to “cure” the mortgage and pay what is due.
As you can see, pre-foreclosures are definitely different from a home that is listed actively on the market. Pre-foreclosures can be awesome for someone with a flexible timeline and someone who doesn’t have a lengthy list of criteria and can be open to location. To win at pre-foreclosures, it is best to keep very broad search criteria and be patient. Be sure to chat with Liz further about pre-foreclosures.
Liz is broker and owner of Liz Daigle Realty.