The real estate market of the United States is vastly ruled by private lenders and the main financial institutions that back them. When these lenders struggle to receive the funds that they are due, these major financial giants may also struggle, which can amount to a serious crisis for the economy and real estate industry as a whole. This phenomenon, in sum, was responsible for the crises of 2007 and 2008, that resulted in a seriously damaged job market, not to mention a serious drop in the average property value across the nation. It is important for consumers to understand the basic operations of the real estate market before they decide to purchase their own property, as this will help them be able to recognize the values of certain properties, understand the best times to buy or sell, and even know how to purchase a home from a real estate auction company.

In order for a property to be available for purchase from a real estate auction company, the original home owners of the property will have needed to miss several payments on their mortgage in a row. This is called being in default of the mortgage, and when it occurs, the lender that owns the home loan will either re-negotiate the terms of the home loan with the borrowers or submit the property for foreclosure. If the property does end up going through the foreclosure process, a real estate auction company will be hired to sell off the home. In recent years, it has become more common for the bank or credit union that owns the mortgage agreement to re-evaluate the terms of the loan in order to preserve the property in the original borrower’s name. This is because filing for foreclosure is expensive, unpredictable, and can take a very long period of time to finish.

If the lender decides to remain strict on the original home loan agreement, they will request that the defaulting borrower pay back the total amount of missed mortgage payments before a certain deadline. If the home owner is unable to make payment in full by this time, the lender will discuss the different options for fulfilling the mortgage with their clients. This depends on the current value of the property and how much the borrowers still owe on the loan. For instance, if the property is currently worth less on the real estate market than the borrowers owe on their home loan, the lenders will discuss a short sale. With a short sale, the lender and borrower agree to accept less than the total amount of the mortgage for the home. If the borrowers had signed a deficiency agreement in their original mortgage documents, they may be liable to make any additional payments to satisfy the total amount of the mortgage if the property is sold for less than what is owed on the loan.

If the short sale process does not fit the lender’s needs, they will likely foreclose on the property completely and hire a real estate auction company to liquidate the home. This process begins by filing for judicial or non-judicial foreclosure with the county. Once this process is complete, the lender now has proper ownership of the home and can sell it off at will. The reason why lenders use the real estate auction company to sell off their foreclosed properties is that these companies are generally able to collect payment for the property in one single day. This is beneficial to lenders that wish to immediately satisfy the debts still owed on the original delinquent mortgage that is now in their possession.