Thinking of buying a foreclosure?

Pay Attention a Foreclosure is not Always For Sale

Our friends at Zillow have clouded the market with how they provide “possible sales”. Please note; they are not alone. All real estate websites and apps do this, but we’ll use Zillow as the example. If you look through listings on these sites and apps, you will see different colors. Zillow uses the colors Red, Purple, and Blue (Yellow references Sold properties) to identify listings.

Quick color guide:

• Red – it’s for sale
• Purple – it’s for rent
• Blue – it’s for driving all of us nuts explaining that you really can’t buy it

The “Blue” dot is like a scene from the Matrix. Remember when Morpheus asked Neo which pill he wanted to take? The line about how one pill goes back to the false reality and the other pill takes you into the new reality? Well, it is kind of like that in real estate. If you choose the Red you get to stay in the wonderland of buying a house. If you choose the Blue ones…well, you don’t go anywhere.

What’s Behind the Blue or Red Dot?

All of the real estate websites or apps are pulling in public data. So, if a homeowner default on a mortgage payment – even just one – the bank will issue a notice. This notice becomes public notice. As such – the data is pulled into the app. It doesn’t mean anything. The house isn’t for sale. It may never be for sale. But, let’s just say that the homeowner and the bank don’t reconcile things. And more payments are missed. Next, up – bank opts to ‘foreclose’ on the house. Depending on where the house is, there are different procedures. In Connecticut (our home state), we have a Strict Foreclosure Judgment. It can take months to get through this process, but once that is done – then the bank will determine if they want to sell the house at auction or on the MLS. Or, they will sell the loan to another group and then THEY will decide if they want to auction the house or sell it on the MLS.

Point is – the “Blue” dot doesn’t mean the house is for sale

A “Red” dot is going to represent a house that should be for sale. It is possible that the house may not yet have a full listing (could be sitting in an auction status for a while), but 99.9% of the time a “Red” dot means it is for sale. To be sure, it is best to connect with your local realtor. Your realtor can pull the MLS data to verify the listing. And, if you are interested, he/she can then help you tour the property to consider an offer. If the property makes sense to pursue, and you meet the financial criteria; well these are some good steps to keep in mind:

http://www.interest.com/mortgage/news/smart-moves-buying-foreclosure/

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