Free Foreclosure Listings

What are Pre foreclosures, Short Sales & Bank Owned Homes?

Preforeclosure - when an owner fails to pay his mortgage payments, a notice of default is sent by the bank, giving the owner about 3 months before the bank forecloses on the property. In order to avoid foreclosure (which leads to destroyed credit), a homeowner may try to sell the property and often will take less than market value. It is during this pre-foreclosure period, that a "short sale" may occur. These homes may or may not be listed on the local Multiple Listing Service.

"Short Sale" or "Short Pay" - When a lender agrees to do a short sale, it means the lender will accept less than the total amount due on the property. If a buyer wants to purchase the home, the seller as well as the lender will be involved in determining if an offer is acceptable. It may take weeks, even months, before a bank responds to an offer during this stage, and we find that many buyers get tired of waiting for that response. All the costs of the sale, the escrow/title fees, transfer taxes, commissions, property tax prorations, etc. must be covered and the seller receives nothing (except debt relief.) If the property owner is unable to sell the property during the pre-foreclosure period, the bank forecloses on the property.

Foreclosure - foreclosure gives the legal ownership of a property to the bank to allow the bank to recoup its investment. Typically a foreclosure involves a forced sale of the property at public auction, with the proceeds being applied to the mortgage debt. In most cases, buyers must have cash or a cashier's check with them at the auction if they want to purchase the property. Here in the Central Coast, there aren't many homes that are being sold at public auction because the minimum bid in most foreclosure auctions equals the outstanding loan amount, the accrued interest and any fees associated with the foreclosure sale. In today's market the debt on the loan for most homes in foreclosure exceeds the value of the home, (negative equity.).

Bank owned or REO - A property becomes an "REO" or "Real Estate Owned" after an unsuccessful sale at a foreclosure auction. At this point, the bank owns the property and will go through the process of trying to sell it, usually by marketing it as a real estate listing with a Realtor. Most often, the bank will remove some of the lien and other expenses that exist on the home. It's important to be aware that by this time, some properties are often in need of repairs and maintenance. However, because banks are not in the business of owning real estate, there are lots of opportunities for first time home buyers and investors who recognize that a lower sale price can more than compensate for the poor condition.

We can provide free foreclosure listings for these cities:

At which stage in the foreclosure process can you find the best deal?

Currently (Spring '08) we are finding that Central Coast buyers are getting the best deals on properties that are bank-owned. Banks are pricing the properties more aggressively now than they did several months ago. In addition, the largest number of properties in foreclosure are in the Santa Maria and Orcutt areas.

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