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When searching on Zillow for your perfect home, you might notice some listings that are labeled as pre foreclosure. Then the obvious question comes to mind “what does pre foreclosure mean on Zillow?” The answer is pretty simple, but be  cautious. Pre foreclosure homes have a lot of uncertainty behind them, and that is not something the average home buyer is looking for.

Pre Foreclosure 

When a property is labeled as pre foreclosure, it means that it is in the early stages of being repossessed. After three months of the owner of the home failing to make mortgage payments, the lender files a default notice on the property. This informs the owner that legal action will be taken if their outstanding debt is not paid. At this point in the process, the owner of the home has a set amount of time to pay their debt. If they succeed in paying their missed mortgage payments, then their property is no longer in pre foreclosure. Many people find a way to make this happen. Therefore, it is not by any means certain that because a home is listed as pre foreclosure, it will ever actually be foreclosed on. 

Foreclosure Process 

The foreclosure process can become lengthy depending on factors such as the location of the home, and the specific situation of the homeowner. Therefore, every foreclosure follows a slightly different timeline, but everyone goes through the same basic steps.

Missed Payments 

The homeowner fails to meet the terms of loan for three to six months. Meaning they have failed to make the agreed upon payments to the lender. This happens for a variety of different reasons such as unemployment, death, or medical bills. Whatever the reason may be, it is at the lender’s discretion as to when they take the next steps towards foreclosure. 

Public Notice 

To continue the foreclosure process, the lender must file a default notice with the County Recorder’s Office. This notice is meant to be an alert to the homeowner that they are in danger of losing their home. Because the notice is filed with the County Recorder’s Office, it is public knowledge. Therefore, Zillow, or anyone else, is able to identify it as in pre foreclosure. 

Pre Foreclosure 

Pre foreclosure is considered a grace period. Depending on local regulations, a homeowner has between 30 and 120 days to pay their outstanding debt. If the homeowner is able to succeed in this, the foreclosure process ends and they are no longer in danger of losing their home. If they do not succeed, the foreclosure process continues. 

Auction

If the lender does not receive payment in the time frame allotted, they set a date for the home to be sold at a foreclosure auction. At auction the home is sold to the highest bidder for cash. Many states allow borrowers right of redemption though. Meaning that up until the moment the home is auctioned, the borrower has the ability to regain the home. They are able to do this if they present the outstanding cash to the lender.

Post Foreclosure 

If no one buys the home at auction, it becomes bank owned property. The bank can then list it on the open market with an agent, or sell it at a liquidation auction. 

How to Interpret a Pre Foreclosure Listing 

As you can tell from the overview of the foreclosure process above, homes that are in pre foreclosure are not actually for sale. There are many steps and actions that can be taken by the homeowner of a pre foreclosure property to remove it from the foreclosure process entirely. Meaning that it potentially never will be for sale

A listing that is labeled as pre foreclosure often confuses buyers. You are not able to tour the home, contact an agent that is representing the home, or make an offer on the home at all. When buyers don’t fully understand what pre foreclosure means they can get their heart set on a home they will most likely never be able to even tour.

Focus on Your Viable Options  

Pre foreclosure homes are not actually for sale, and many times never will be. Focusing all of your attention on a pre foreclosure home can lead to an upsetting real estate experience. It is best to focus on homes that you know are viable options. If you see a pre foreclosure home you are very interested in you can continue to check up on it, but be prepared for it to never be for sale. Often times your real estate agent will tell you not to focus on pre foreclosure listings at all. Then to only review them if they ever actually go on sale. Hopefully by now your question “what does pre foreclosure mean on Zillow?” is answered, and you are more prepared to continue house hunting.

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