A homeowner is considered in “pre-foreclosure” when they have missed more than two payments and the bank has started the proceedings to foreclose on the home. This step will go all the way through the public auction phase.
Once a home has reached the auction stage and is auctioned off, then the foreclosure process is complete. However, sometimes these homes simply don’t sell and they revert back to the lender over the home loan. This of course is not what the lender wants. They receive no benefit from a piece of property just sitting there empty. The property is now said to be “Real Estate Owned” by the lender a.k.a REO.
This is where you as a real estate investor come into play. These REO properties are usually sold for far less than the market value. The only hitch is that usually the lenders want to sell multiple properties in a package deal. So as an investor you want to make sure that you have partnered with someone or a company that has a good funding source.
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