“I thought I was going to walk away with a big check.”
That’s what Lisa M., a homeowner in Riverside, CA, believed when she decided not to sell her home and instead let it go to foreclosure auction. After all, she had nearly $100,000 in equity. Her mortgage balance was $260,000 and her home was worth at least $360,000, maybe more. Like many homeowners in default, she figured the bank would sell it at auction, pay off her loan, and then cut her a check for the rest.
But reality didn’t work that way.
The Harsh Reality of Foreclosure Auctions
When Lisa’s home went to auction, it sold for just $280,000—well below its market value. The buyer was an investor looking for a deal, and foreclosure auctions are known for attracting bottom-dollar bids. After legal fees, trustee costs, interest, and penalties were taken out, Lisa ended up with less than $30,000.
“I thought they had to give me fair market value,” she said. “But no one told me that the auction was basically a fire sale.”
What’s worse—she had options. A simple conversation with a foreclosure specialist or investor could’ve helped her sell her house before auction and walk away with $80,000 or more, depending on how quickly she acted.
Why Homeowners Delay Taking Action
Many homeowners in foreclosure hold off for three reasons:
- False Hope: They think the bank will work something out or postpone the auction.
- Lack of Information: They don’t realize they can still sell even days before the sale.
- Fear or Shame: It’s hard to admit there’s a problem and ask for help.
But the longer you wait, the fewer options you have—and the more control you give to the lender.
The Lesson: Protect Your Equity While You Still Can
Lisa’s story is heartbreaking, but it’s also preventable.
If you’re in preforeclosure and you have equity in your home, you owe it to yourself to explore every option before letting it go to auction. Selling to a qualified cash buyer or investor allows you to:
- Avoid foreclosure on your credit report
- Walk away with more money
- Stay in control of the timeline
Don’t wait for the bank to decide your financial future. If you’re behind on payments and don’t know what to do next, reach out. There may be a much better path than the auction block.