Definition

Pre-Foreclosure

Pre-foreclosure is the period after a homeowner falls behind on the mortgage but before the home is sold at foreclosure auction — from the first missed payments and default notice through the pending court case. The owner still owns and can still sell the home.

Pre-foreclosure is where options live: reinstating the loan, a modification, a forbearance, selling on the open market, or a fast cash sale that pays the loan off before judgment. Every option narrows as the auction date approaches, which is why the worst move is waiting.

Selling during pre-foreclosure pays the lender in full at closing, stops the case, and preserves whatever equity remains — an outcome dramatically better than an auction, which often extinguishes equity and leaves a completed foreclosure on the borrower's record.

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