What The Heck Are Pre-Foreclosure Sales?
If you are looking for good property at a good price, you need to do a lot of homework. You might have looked at the tempting offers about buying and selling foreclosure properties, but the ethics about it may make you a little hesitant. One option that’s attractive to many is looking into property going into pre-foreclosure. This is the time before the property is turned over to the lender or government and the homeowner is cooperative in the sale.
Advantages
There are many advantages to buying pre-foreclosure homes. Since the homeowner needs the money quickly, only a small down payment is needed. You should not be pressured for time and can inspect the home thoroughly before any money changes hands. You can save as much as 40% on the value of the home. Pre-foreclosure sales contracts can normally be customized for your satisfaction.
Disadvantages
Although the homeowner is agreeable to selling the home, they usually are problems of one sort or another and can be tricky to get a hold of when you need to. You also probably aren’t the only buyer, so you might have to face the same competition as for a home on the “normal†real estate market. You also might have to deal with other parties that hold liens on the home, as well, such as the original homeowner’s lender.
Finding Lists
You need to research if you want to find lists of pre-foreclosure homes. You need to have a specific state and county in mind when seeing if there are any pre-foreclosure homes. You have to check the county or city courthouse records (which are open to the public) for any sign of “lis pendensâ€, which means someone has defaulted on a loan and that the lender has filed for action against the homeowner.
When you locate a potential address, contact the homeowner and the lender. Be as polite as you can when you call the homeowner; he or she is under a lot of stress. You need to find out if the homeowner is willing to sell. If the answer is yes, then you need to call the homeowner’s lender to find out how much is owed. If you buy the pre-foreclosure home, you will be taking over the mortgage payments where the original homeowner left off.
Also, it’s a great idea to know what the average market value for homes in the area of your potential new home is going for. This way you can assess if you are getting a deal or not. It’s also not really worth buying a home in a area that is “dead†in homebuyers, unless you really personally like the property.
