It's a sad fact, but many Americans lose their houses to foreclosure every year. Some lending institutions aren't always thorough enough in checking someone's capacity to make repayments, and others don't really care. And of course, there are times when a change in conditions happen, leading to the owner being unable to meet their mortgage obligations.

Whatever the cause of a person getting behind on their mortgage obligations, the process from that point onwards is fairly set. Initially, the lender will file a public default notice. This initiates the foreclosure process, and at this point the home officially enters the pre-foreclosure phase.

So basically, pre-foreclosure is like a grace period. The owner is being told that they're in arrears and need to do something about it. At this point, the bank is unable to get the property and sell it to make back their expenses. The duration of the grace period varies, as it's established by state laws. Some states allow the grace period to last for as long as six months, but many states have shorter periods.

Once the property enters pre-foreclosure, there are a number of ways the owner can avoid having their property foreclosed on and sold by the bank.

Selling The Home

This is most likely the best solution if making the payments is likely to be an ongoing problem. By selling the house, the owner should be able to get a reasonable price for it. If the owner waits and lets the lender sell it, the sale price is almost certainly going to be much lower, because the lender just wants to offload the home as quickly as possible.

This is often a great time for a real estate investor to approach the owner with a fair offer to purchase the home. However, many people in pre-foreclosure go into denial, and instead of trying to make the best of a bad situation, will actually avoid taking action until it's too late. A lot of people also don't understand the long-term detrimental effect a foreclosure can have on their credit score.

Nobody wants to face foreclosure on their home, but at least the pre-foreclosure period gives the owner the opportunity to find a solution - such as a Short Sale - that's a little more favorable for them.

Short Sales

By using a Short Sale, your home is saved from foreclosure, thus helping you to keep your credit rating. The lender wins by avoiding timely and costly foreclosure proceedings. And, the buyer of your home wins by getting a solid property at a good price.