|Redondo Beach Foreclosure Listing|
I usually get about one inquiry per week regarding a "foreclosure" listing in Redondo Beach on Zillow. Unfortunately, most of the Zillow "foreclosure" listings are just misleading and confusing the public as upwards of 90% of what they are displaying are more accurately properties in the foreclosure process, ie a Notice of Default (NOD) or Auction (NTS) has been filed. And, to be fair, Zillow does identify these as "potential listings". But for the first time home buyer who may have been told by someone who purchased a few years ago to buy a foreclosure (REO or short sale), this is a huge waste of time.
If you are not familiar with how foreclosures work, here's a very general outline with some tips on what is creating the confusion.
After a homeowner misses 3 or more mortgage payments, the lender can file a Notice of Default. This is public record and Zillow picks it up and shows that property as "pre-foreclosure". Well as soon as that home owner brings their payments current, there is no foreclosure. More importantly, it is not a home that is "listed" for sale in most instances and I certainly can't start bringing buyers there to see it. Some of these "pre-foreclosure" properties will wind up as "short sales" but even if they do, these days it is unlikely a bank will approve a short sale at below fair market value while property values are still increasing.
Next up are "auctions".
These are Trustee Sales on the courthouse steps for "all cash". And again, if the default judgement is below what the property is worth, which isn't likely to happen, and you do have the cash to buy it outright, you will be bidding against other investors and flippers looking to buy that house below market value as well. And then you have the eviction process to most likely deal with, clearing title and a host of other issues.
|Zillow Potential Foreclosure Listings|
|Redondo Beach "Auction" Listing|
This property had a Notice of Trustees Sale filed on 10/09/2015 with a final judgement amount of $990,000 yet for some reason Zillow shows it as "from $655K" with a foreclosure estimate of $967K. Huh?
To start with, I could easily sell this property for over $1M. The bank could most likely take it back and sell it as a retail REO for what the judgement is. (REO stands for Real Estate Owned.) So why would Zillow show it as a $655K property? (I have mu theories.) The punch line is that most uninformed buyers think the banks are desperate to get rid of REOs and are discounting them. Now way.
Personally I would prefer that Zillow and other web sites did not display these "pre-foreclosure" listings along with actual properties listed in the MLS.