I got questions from 2 clients recently regarding “pre-foreclosure” homes they saw advertised on various websites. Several websites advertise pre-foreclosure homes for sale and even have prices listed, all which appear to the buyers as incredible deals. One of my clients even paid for a service to provide a list of pre-foreclosure homes.
After reviewing the homes these clients sent me (the one that paid, none of the homes on the list were in foreclosure!), I would like to argue that the only reliable source of pre-foreclosure homes in the Colorado Springs area is the El Paso County Trustee’s office. Here is their foreclosure search http://www.elpasopublictrustee.com/ForeclosureSearch.aspx. All foreclosures must be commenced with the Public Trustee in the county where the property being foreclosed is located. So, all homes in foreclosure in El Paso County, Colorado will be listed on the Trustee’s site.
Sites such as Zillow gather information from public records. In a quick audit I did of preforeclosure homes in my neighborhood, I found that Zillow was pretty accurate as to the addresses. But, their “foreclosure estimate” is defined on Zillow as “the price we predict a property will finally sell for if it’s listed as a foreclosure (bank-owned property or real estate owned)”… not a reliable estimate of the actual sales price. The actual list price of a bank-owned home is determined by the bank through a process that involves obtaining price opinions from real estate brokers- so, the actual list price of a foreclosed home once it comes on the market can be quite different than the overdue amount on the loan or an estimate on a website.
Finally, the time frame for a home to go from pre-foreclosure status to being listed for sale can be quite lengthy. Typically, a borrower must be three or more months delinquent on payments before entering the foreclosure process. This is the pre-foreclosure time period in which a mortgage company and its legal department will send warnings and possibly “intent to foreclose” letters.
Typically, after about three months of missed payments (varies by lender/situation), the mortgage company will file a Notice of Election and Demand (NED) with the public trustee from the respective county. This notice is sent to the homeowner, marking the beginning of the official foreclosure process. Then, a sale date is set several months out and this date can be deferred for months on end, depending on back-end circumstances and requests for deferment. Then, once the sale date occurs and the lender (in most cases) takes ownership of the property, it can take several months (or even years) for the lender to put the house on the market for sale.
However, many homes are listed for sale during the foreclosure process, as either regular sales or short sales (see our post about Short Sales here)
For more information on the foreclosure process in Colorado, visit these sites:
Colorado Foreclosure Hotline
Colorado Foreclosure Process and Timelines, by Attorney Oliver Frascona