Most people in the US are aware of the current real estate crisis and the unsettling fact that many people are losing their homes to foreclosure. Before a home is in the process of becoming foreclosed, it is in the pre-foreclosure stage. The pre-foreclosure period can last anywhere from a few weeks to a few months, and is considered by many real estate investors as the absolute best time in which to negotiate the purchase of a home.
Many houses that are ‘for sale by owner’ are houses that are in a period of pre-foreclosure. The lenders sometimes allow the homeowners to try to sell their home before foreclosing it. The banks are not in the real estate business themselves and would rather the owners sell the home instead of (the lenders) having to foreclose it.
Here are some of the reasons many real estate professionals prefer purchasing a pre-foreclosed properties rather then waiting until they reach foreclosure:
- A pre-foreclosed home could actually be cheaper then foreclosure because you are dealing one-on-one with an owner who desperately wants to avoid foreclosure.
- Since you won?t be at an auction, you will be given more time to talk to the home owner about any questions you may have concerning the house.
- Typically less competition then at a foreclosure auction where there is multiple bidding for the same property. Foreclosures attracts more of the mass real estate market then pre-foreclosures does.
- You will be given more time to consider your finances before making the decision to purchase a pre-foreclosed home.
- Auctions can be either overwhelming or lead to egotistical or emotional decisions.
- You can bring an inspector along with you to inspect the pre-foreclosed home. You will be given more time to have it looked over.
- All you?ll need to buy a pre-foreclosed home is a down payment for as low as a few hundred dollars. At a government auction you would need the entire amount in cash.
As with any house purchase make sure you check for any judgements, or liens against the estate. Bring along someone how is familiar with buying real estate and if possible have the house professional inspected. The risks are comparable to a traditional type of home purchase but with the advantages of foreclosure discounted pricing.
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