Pre-foreclosure properties are properties that are not often for sale. When property is in a pre-foreclosed stage it is a period between the times in which a Notice of Default has been issued to the homeowner and after the property is sold at a foreclosure auction. Another way to describe this situation is that it is property that has been reverted to the mortgage lender after the home fails to sell in the foreclosure auction.
Pre-foreclosure properties can be a great deal for a buyer; however, there are several things you should know before investing in one such as first looking for pre-foreclosures on real estate sights like Zillow. Then, drive by once you find a property. Check out the location and condition of the house. Then, if you want an update on the house, contact a local foreclosure specialist. He or she can help you with this process.
In addition, check public records and find out about the outstanding loan balance and liens on the home and then consult with a local real estate agent. Once you have done some homework on the house, contact the homeowner and let him or her know that you are interested in the property. If you are able to do so, take a tour of the property.
Add up how much you will need to spend on repairs and then subtract that number from how much you are willing to spend on the house. Negotiating is next and then once a deal has been reached, draw up a purchase agreement. A real estate agent can help you with this process if you feel that you need additional help.
There are several benefits in investing in pre-foreclosures such as working with motivated sellers. Negotiation power is another benefit. When a seller is in pre-foreclosure, payments to the bank have stopped. This works in your favor because the seller needs and wants to move fast, making this buying process go better and faster.
Most importantly, this kind of house buying can be a great deal because these homes often sell for what is owed on the loan instead of the current market value of the house. Another benefit is avoiding an auction. An auction can be exciting for some but others find it noisy and uncomfortable.
With a pre-foreclosure house you can avoid others competing with you on the same house, you are able to visit the house and know its true condition and are able to have it carefully inspected. This is not the case with a house that is in the foreclosure state.
To conclude, pre-foreclosure properties are properties that are not often for sale. When property is in a pre-foreclosed stage, it is a period between the time in which a Notice of Default has been issued to the homeowner and after the property is sold at a foreclosure auction. Talk with a realtor soon and find out if a pre-foreclosure property would be the right for you.