What is a pre foreclosure sale?

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A pre foreclosure sale refers to the sale of a property by the homeowner before it is officially foreclosed upon by the lender. This option allows homeowners to avoid the negative consequences of foreclosure while potentially satisfying their outstanding mortgage debt. In this article, we will delve deeper into the concept of pre foreclosure sales, exploring the process, benefits, and considerations involved.

Understanding Pre Foreclosure

What is Pre Foreclosure?: Pre foreclosure is the period between when a homeowner defaults on their mortgage payments and when the lender initiates the foreclosure process. During this time, homeowners have the opportunity to sell their property and pay off the outstanding mortgage balance. The pre foreclosure period typically lasts several months, providing homeowners with a chance to find a buyer and avoid foreclosure.

How Does Pre Foreclosure Work?: When a homeowner falls behind on their mortgage payments, the lender will issue a notice of default, marking the beginning of the pre foreclosure period. During this time, the homeowner can actively market and sell their property. The proceeds from the sale are then used to pay off the outstanding mortgage debt, including any fees and penalties incurred. If the sale amount is sufficient to cover the debt, the foreclosure process is halted, and the homeowner can avoid foreclosure.

The Benefits of Pre Foreclosure Sales

1. Avoiding Foreclosure: The primary benefit of a pre foreclosure sale is the ability to avoid the negative consequences of foreclosure. Foreclosure can severely damage a homeowner’s credit score and make it challenging to secure future loans or credit. By selling the property before foreclosure, homeowners can protect their creditworthiness and financial standing.

2. Control over the Sale: Pre foreclosure sales allow homeowners to maintain control over the sale process. They can actively market the property, negotiate with potential buyers, and choose the best offer. This control can result in a more favorable sale price and terms compared to a foreclosure auction where the lender sells the property.

3. Potential for Equity Preservation: In some cases, homeowners may have built up equity in their property. By selling the property during the pre foreclosure period, they can potentially preserve this equity and use it to pay off their mortgage debt. This is particularly beneficial for homeowners who are facing financial difficulties but have significant equity in their property.

Considerations for Pre Foreclosure Sales

1. Time Constraints: The pre foreclosure period is limited, and homeowners must act quickly to find a buyer and complete the sale. It is crucial to start the sale process as soon as possible to maximize the chances of a successful sale.

2. Negotiating with Lenders: In some cases, homeowners may need to negotiate with their lenders to obtain approval for a pre foreclosure sale. Lenders may have specific requirements or conditions that must be met before they agree to the sale. It is essential to communicate with the lender and understand their expectations.

3. Financial Implications: While a pre foreclosure sale can help homeowners avoid foreclosure, they may still face financial implications. Depending on the sale price and outstanding mortgage balance, homeowners may still owe a deficiency amount. It is crucial to consult with a financial advisor or real estate professional to understand the potential financial implications of a pre foreclosure sale.


In summary, a pre foreclosure sale provides homeowners with an opportunity to sell their property and pay off their outstanding mortgage debt before foreclosure. This option allows homeowners to avoid the negative consequences of foreclosure, maintain control over the sale process, and potentially preserve any equity in their property. However, it is essential to consider the time constraints, negotiate with lenders if necessary, and understand the financial implications before pursuing a pre foreclosure sale.


– Investopedia: www.investopedia.com
– The Balance: www.thebalance.com
– Nolo: www.nolo.com