What Is The Difference Between Preforeclosure, Auction and Bank Owned Properties?
When people visit our website SouzaRealty.com for a free foreclosure search, they have the option to search for foreclosures in three different categories within the foreclosure timeline:
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.
BOB & LEILANI SOUZA
Real Estate Investment Specialists
Southwest Placer County, CA
Bob Souza - 925.513.3400 - bob@souzarealty.com
Leilani Souza - 916.408.5500 - leilani@souzarealty.com
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Nicely done, succinct explanation of these 3 categories.
Leilani: Excellent job of highlighting the differences. I'm sure it's a question that clients have asked you in the past...thanks for sharing your knowledge.
Thanks, Michelle! Although we know the lingo as real estate professionals, it doesn't mean that these terms are "self-explanatory" to the general public. :)
Leilani
Anita, thank you...and you're welcome! It is quite a frequently asked question, which is why I've decided to write a blog post about it. :)
Leilani
Hi Leilani,
Your blog has a nice, clean, symmetrical look.
The information is good also. And you had the foresight to provide a link to your website for each category.
Good job!
Phil
I appreciate your compliments, Phil...thank you so much for stopping by! :)
Leilani
Leilani,
Many of the media reporters lump all these categories together. That is so confusing. I'm sure your clients find your wise choice to separate each category of distress properties really is helpful.
Best,
Steve
Great job Leilani on explaining these three categories and have suggested this for a feature.
Leilani, the public is confused about all these different terms, and you laid it out quite plainly - great post!
Leilani, great job on this! You explained it clearly and concisely. Have a wonderful weekend!
Bob & Leilani - What a great explanation. I know so many buyers are very confused and don't know the difference.
You're right, Steve...it is confusing to know the differences between these types of foreclosure properties, so I thought this was a perfect blog post to write! :)
Leilani
Thanks, Rebecca...I appreciate you suggesting this for a feature! :)
Leilani
Joan, thank you and I'm glad this post will help clear up any confusion buyers have about the difference in the types of foreclosure properties! :)
Leilani
Thank you, DeeDee...and I hope you have a GREAT weekend, too...and a wonderful Valentine's Day! :)
Leilani
Michelle, this is probably one of the most frequently asked questions we get from buyers, so I'm saving a link to this post on my "links" sidebar! :)
Leilani
Hi Bob and Leilani,
Thank you for a great post. I also get the question from buyers on this one regarding how long does it take on average to close a short sale or REO.
Thank you,
Arpad
You're welcome, Arpad! :)
Leilani