No wonder consumers are confused about the forclosure process. Here's a simple guide to the basic types of forclosure related sales.
Short Pay or Sale: The homeowners have negotiated with the lenders to sell the property at less than is required to pay off the original loan. The lenders agree to accept the net proceeds as full payment for the loan, but there is an approval process which can add several extra months to escrow. Many transactions are not approved.
NOD (Notice of Default): The lenders record this document with the county to officially start the forclosure process. Homes in this category can still be listed and sold by the owners until the foreclosure is final.
Bank and Investor Owned (REOs): The owner has defalted and the lenders or their assigns now hold title. There is usually a corporate approval process, but since California has no right of redemption after the foreclosure is final, the property is essentially listed for sale by the legal owners.
What's really happening with a lot of these sales is that the lenders and corporate owners are willing to sell at up to 20% less than market value to clear their books and generate cash flow. The result of all of this 'forclosure' activity is that the market is experiencing an artificially low valuation and is likely to stay that way until the excess inventory of properties is sold off.
With the exception of unlisted NODs, all of these other categories of properties are simply for sale. They shouldn't be considered a better deal than a house offered by an undistressed owner who is willing to sell at the prevailing rate.
There are also an increasing number of homes being offered at 'leader' prices which are obviosly low by any standard. These are typically corporate sellers who have listed a property so low that it creates an informal auction. There's an initial frenzy and then the remaining serious bidders duke it out. It's an obvious ploy that genrates a lot of interest quickly and often ends up selling the property for more than it might have. Also, the public never sees the final result so it leaves a false impression, creating yet another drag on the market and frustrating a lot of buyers.
Here's a link to a good free tool called Market Snapshot that may be useful to you. It will give you this week's housing pricing and conditions including community reports for any neighborhood from L.A. & Orange County to San Bernardino.
Please feel free to contact me through my Trulia Profile or my website posted below if you have more questions. Best of luck.