What are the Different Stages of Foreclosure and What Do They Mean?

by admin on August 24, 2010

Question:

I’m interested in buying a home in foreclosure, but I don’t know what the different stages are or what they mean. I’ve seen “notice of default”, “real estate owned”, “notice of foreclosure sale”, and “pre-foreclosure.” Can someone please tell me the stages (from beginning to end) and what that means to me as the potential buyer?

Answer:

The first step in the foreclosure process would be the receipt of the Notice of Default. In this letter, the borrower is told that he has missed his payments and that the foreclosure process is coming. The Real estate owned (REO) is the bank who owns the foreclosed house. If you want to buy a house undergoing foreclosure, buying it during the pre-foreclosure stage would be the best time. People often get a good deal when negotiating with the bank at this time. Remember that a getting a good deal or being in good terms is better than having a good price.

Once the house is completely foreclosed, the bank would sell the property to the highest bidder or put it in a public auction. Buying during this time is not recommended because there would be lots of people who will join the foreclosure sale. Usually, these people have tons of bucks to plop down the house. Lastly, they usually give payments in full cash deals so they have the advantage. So if you want to buy a house under foreclosure, going to the pre-foreclosure route would be the best choice. You may read more about the process in order to familiarize yourself with the things that you need to have and do prior to the purchase of the house.

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