It seems like every week I get excited calls from clients of mine—be they potential investors, actual investors, or homebuyers—about a house they found on Zillow that carries a ‘pre-foreclosure’ label. They may even do their homework and say something like, “I looked it up—it’s in pre-foreclosure and it’s going to go to auction for $200,000. It’s an $800,000 house!”
Over and over again, I have to have the same conversation with them. ‘Pre-foreclosure’ means that a borrower (most likely the home’s owner) has fallen behind on their mortgage payments. They’ve likely missed at least three payments, and the lender has now filed a notice of default at the county recorder’s office. If they owe, say, $100,000 or $200,000 and the home is worth $800,000, the likelihood of that property going to auction and anyone being able to purchase it for a fraction of its value is very slim. In other words, it’s not worth your time and attention.
“With so many things that can happen with pre-foreclosure homes, they’re really not worth pursuing.”
In most pre-foreclosure cases, there are many solutions available to the borrower to help them change their predicament. They could catch up on their payments, put the home on the market, or work out a forbearance plan with their lender. With so many things that can happen with pre-foreclosure homes, they’re really not worth pursuing, especially when there are other homes for sale on the market. Those are the homes that are worth your time and attention.
With everything that’s happening in our economy and world at large, I expect to see more pre-foreclosures in the future. Before you see one on Zillow and get excited, though, remember that it may not present the opportunity you think it does.
Regardless, I’d love to talk more about this topic with you if you have questions, so don’t hesitate to call or email me. If you’d like to know more about our real estate market in general, feel free to reach out to me as well. I look forward to helping you meet your goals.
