Why don't home owners sell the house as a regular sale before foreclosure has to come?

Homeowners are allowed to sell their houses anytime they wish. However, when the market falls (meaning homes don't maintain their value) people don't want to pay more for a house then its worth. That's what happened in the last 3 or so years. Somebody would buy a home 3 years ago for lets say $300,000 and under normal circumstances - the home would appreciate (gain in value) and the homeowners would pay down the mortgage. Now that the market is down, that 300,000 house is worth only 225.000 - so that if the homeowner decided to sell, and the buyer would only pay 225,000 for the home and the homeowner would have to make up the 75,000 difference to the bank. Nobody wants to do that. It just takes too long to earn and save $75,000. I hope that clears this up for you.

If you bought the house "As Is," then there's no one to sue. It will be pretty clear to a judge from the as-is clause in the contract that you purchased the house understanding that there may be severe problems with it. If the house was not bought in as-is condition, then you would have to sue the mortgage company that you purchased from. It was the previous owner of the house and was responsible for upkeep and making sure it was in salable condition. But there's little chance you'd have any case against the former homeowners. And anyway, they went through foreclosure and lost their home -- how much money for repairs do you think you'll be able to collect from them? They can't even borrow money to pay your judgment against them if you sue. The foreclosure victims have no responsibility for the house after their ownership interest has been transferred. At that point, it is up to the bank that owns the house either to disclose any problems before the sale or have them repaired. Since banks don't care to do much with foreclosures, though, it's more likely they'll sell it in as-is condition and let you know they don't any responsibility for anything wrong with the house. That's why foreclosure buyers usually have their own home inspection done before closing on the house. If the lender didn't sell it to you that way, then it might be responsible for making any repairs to the house for damage that was never disclosed to you during the sales process. But you'd have to sue the bank responsible for disclosing the damage -- not the former owners possibly responsible for causing the damage. Hope that helps. ForeclosureFish

I don't think that there are any requirements that prevent homeowners from selling their home before foreclosures. I think that a lot of people are so upside down on their purchases (they owe more, usually a lot more than the home is worth) and it doesn't make sense to sell at a big loss when you're already in financial trouble.

The problem recently has been the borrower owed more than the house would bring on the open market.

There is no restriction of when you can sell. In normal times people do just sell before they get in trouble but market values dropped so quickly and so far that many were caught in the trap.

Simply put, it's not a Sellers Market, it's a Buyers Market.

It is very simple: If you are underwater on a mortgage, can't sell the house for what you owe on it, and can't make the monthly payments......it will go to foreclosure and the bank will absorb the loss on the loan and get what they can out of it from another buyer.

Because the economy is so down that people cannot sell their homes, esp for the price they desire. And there are no requirements about selling your home

You can't know all the aspects of a situation. Yes they could sell the house, but in most cases they own more than they can sell for, creating a "short sale" scenario for which they need the lenders approval. That is almost impossible to obtain from lenders. Foreclosure and bankruptcy are two different things. Foreclosure is when the bank takes the house back. Bankruptcy is filed by an individual for all their debt.

Some do try to sell. The problem is the market is saturated with houses for sale, loans are hard to get, or the owner owes more than what the house would sell for now anyways.

Smart people sell the INSTANT they see that they're not going to be able to make payments.

People in denial think they'll FIND A WAY TO SAVE IT. And they usually maintain that position or feeling until the bitter end. So they end up going down with the ship.