What Is The Difference Between Preforeclosure, Auction and Bank Owned Properties?
Preforeclosure properties are those that have been issued a Notice of Default by the lender ("Beneficiary"). This is the first step the Beneficiary takes in the foreclosure process. After 3 months of missed mortgage payments, a Notice of Default may be filed with the County Recorder and mailed to the Borrower. Many properties in Preforeclosure are also listed as short sales and can be "active short" (available) or "active short contingent" (an offer has already been submitted to the bank).
Auction properties are those that have been issued a Notice of Trustee's Sale with an auction date. The Notice of Trustee's Sale is filed with the County Recorder, mailed to the Borrower as well as the Occupant, and also posted on the front door of the property. The auction date may be postponed due to Bankruptcy, Beneficiary's Request, Mutual Agreement or even for No Reason. If it is not postponed, an Auction property will be sold to the highest bidder during the Trustee's Sale. If no one bids, the property becomes Bank Owned.
Bank Owned properties are those that have reached the end of the foreclosure process and did not sell to a 3rd party at the Trustee's Sale but have "sold" back to the bank. These properties are also known as REOs (REO = Real Estate Owned). They remain in "shadow inventory" until they are ready to be listed for sale by an REO listing agent. It could take anywhere from a couple of weeks to a couple of years (or more) for a Bank Owned property to be listed for sale on the MLS.
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