Without going into too many details, a lot of people have no idea what's actually involved in a home going into foreclosure. With everyone concerned about the economy and what's coming next, I'm sure I'll be getting this question more in the coming future. But keep in mind there are about six phases that have to take place.
So phase one is the payment default. Before your home gets foreclosed on, you’ve got to miss a payment. And so if you see a house that is in pre foreclosure, it could just mean that they have missed one payment. And whatever website that you're searching on happens to now pay someone who has that information.
After that, there's the notice of default. That's where the lender or the mortgage holder has to make an official notice to the homeowner that they are in default and they are going to proceed with foreclosure processes.
And then there's the notice of the trustee's sale. So this is where people start to get excited. That's where HGTV gets a little more interested because that is where a public declaration or public notice of an auction starts to pop up. At that point, you might guess.
Phase four would be the actual trustee sale or the auction. This is typically what you see online or see in the TV shows where people will go to the courthouse and actually auction for the property. If no one purchases the property, it will go back into the lender's names. Oftentimes you'll see the mortgage holder or the lender be the ones who actually purchased the property.
In that case, it is now an reo or real estate owned property, in which case they are working through taking care of different liens or getting the property listed, either with some sort of website or reo manager. Or sometimes your local real estate agent might have those listings so that can be a good place to find foreclosed properties as well. And then finally, once the property has truly been sold, that foreclosed property is out of the lender or mortgager's name,
Then it is now eviction time. If the house isn't already empty, it is now up to the new owner to take care of any occupants that might still be there, in which case you can go through the courthouse, go to the Sheriff's office, go through an attorney. Depending on your situation, your state, whatever that might look like. Now it is up to you to own this property and take care of anyone who might be still calling it home.
So I hope this never happens. I hope we get to avoid this as much as possible but a lot of investors typically love the idea of a foreclosed property without really understanding all of the steps. I hope this helps. If you have any questions questions about the foreclosure process or what it looks like to purchase some of these or if investing is right for you hit us up.
