Foreclosure
The legal process a lender uses to take back a home after the borrower stops paying. The property gets sold to recover what's owed. Process varies by state.
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Part 1 of 4
Why a seller cares
Foreclosure is the lender taking the home back after missed payments, on a timeline set by the state. Selling before the auction, even in a short sale, usually leaves a seller in a better place than the auction does.
Part 2 of 4
A simple example
Four missed payments, a notice of default, and an auction date four months out. The home is worth more than the loan, and it is listed the following week.
| What the seller does | What tends to follow |
|---|---|
| Sells before the auction with equity | The loan is paid off and the equity is theirs |
| Sells short with lender approval | The loan is settled for less; the deficiency depends on the letter |
| Lets the auction happen | The home is sold for what it brings, and the record shows a foreclosure |
Foreclosure has a clock. Everything a seller can do runs on the time before it.
Part 3 of 4
What people get wrong
That once the notice arrives it is too late to sell. The notice is the start of the window, and the window is usually months.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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