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.
Every term like this one lights up in the step you're on.
Free to set up. No credit card.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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