Defaults

Auction

Bank Owned

This status indicates a notification has been given to a borrower stating that he or she has not made their payments by the agreed schedule. The default amount is typically how much the borrower is behind on their payments. This period is referred to as pre-foreclosure. Buying a property in pre-foreclosure involves approaching the borrower/owner and offering to buy the property outright.

If the borrower has not had the loan reinstated by the end of the pre-foreclosure period, buyers can bid on the property at a auction. Buyers often are required to pay in cash at the auction and may not have much time to research the title and condition of the property beforehand; however, a public auction often offers some of the best bargains and avoids the unpredictability of dealing directly with the borrower/owner.

If the lender takes ownership of the property because it failed to sell at auction, the home becomes a bank owned foreclosure. A bank will then try to sell this REO (Real Estate Owned) property through a Realtor® or third-party marketing company. Because banks are in the money—lending business — not the real estate business — they want to sell as quickly as possible.