If you’re a house hunter in Denver, chances are you’ve seen the term “pre-foreclosure” on some of the listings that come up in your search. You might be wondering what this type of property actually is. A pre-foreclosure home is a distressed property that the lender has not yet repossessed and sold at auction. Pre-foreclosure homes are generally still occupied by their owners, who have fallen behind on monthly mortgage payments. The occupants of pre-foreclosure homes will have received a default notice, but may still be working to stave off foreclosure. In other words, a home can be pre-foreclosure and not for sale.
If a pre-foreclosure home is for sale, you’ll typically see it listed as a pre-foreclosure property or short sale on real estate sites. A short sale is a sale in which a homeowner in default sells a home to prevent foreclosure.
If you decide you want to purchase a pre-foreclosure property, you won’t necessarily arrange a mortgage and make a down payment like you would for a normal home purchase. Instead, you’ll cover what the current homeowner owes. That means you’ll be responsible for the loan balance, any liens on the property and any unpaid mortgage and homeowners insurance. You’ll pay those funds to the seller and take over the property from the seller. This process will go more smoothly if you can offer to pay in cash, but it’s not a requirement.
Ideally, you would want your total costs to add up to a total that’s well below the value of the home. Keep in mind that you may also have to cover the cost of repairs to the home. Buying a pre-foreclosure home is an opportunity to pay a lower-than-market price. You’ll also face less competition than you would if you bought a foreclosed home at auction.
Are you ready to start checking out pre-foreclosure options in Denver? Contact Metrowest today! We specialize in these types of sales and would love to help you start the process.