In today's market, the term "foreclosure" is bantered about quite freely and used to cover the varying stages of the foreclosure process.
- Foreclosure: This is a property that has been foreclosed on and the bank now owns it. Also known as an REO (real estate owned).
- Short Sale: This is a pre-foreclosure. The property is still in the owner's name; however, they can no longer make their mortgage payments and are usually several months in arrears.
- Auction: This is a property that the lender is foreclosing on and is scheduled to go to auction on the Courthouse steps. Yes, they really do this on the Courthouse steps!
Many buyers call an agent and say they are interested in buying a foreclosure. Many agents don't blink an eye and start looking at all the foreclosed and short sale properties on the MLS (Multiple Listing Service). However, there is a "market" that s becoming more popular: the auction.
As stated earlier, auctions occur on the Courthouse steps and attendance varies, depending on the area. Here on Kauai, there are generally few attendees. Auctions take place Monday through Friday. The key to successfully navigating an auction is to know the process, the pros, and the cons. Or, hire a real estate agent who can.
As real estate agents, we work hard to find the right properties and navigate through the sale process for our clients. With auction properties, the search is more time consuming. Upcoming auction properties are not listed as such on the MLS.
If you are interested in properties being auctioned, searching on your own can be daunting. Hiring an agent can alleviate your stress and the agent can utilize resources you don't have access to to find the right property for you. In addition, an agent will have information on the process, the pros, and the cons in his or her own state.
In any case, knowing the differences between the different types of properties (foreclosure, short sale, or auction) helps you determine the process so you can make informed decisions about your purchase.
Buyer Be Educated, Seller Be Prepared
©2010 by Nance Overton, RA, CDPE (RE/MAX Kauai)