A pre-foreclosure property has a delinquent loan and the owner is in imminent danger of losing his house because of foreclosure. His property was listed as delinquent and will shortly be taken into the custody of the lending company. Buyers may be able to obtain a pre-foreclosure for 40 percent less than the home’s market value, and the deal would shut faster than would a foreclosure. The competition for the house may be fierce, though, and the home is sold in”as is” condition.
A pre-foreclosure home’s loan is in default. The defaulted loan was listed in public records, starting the pre-foreclosure procedure. This procedure lasts from 90 days to 10 months or more and culminates with a public residency or auction sale. The pre-foreclosure period goes fast and the vendor will be motivated to sell. The seller needs to sell the property prior to the foreclosure procedure is complete or he loses control of their property. A pre-foreclosure deal occurs between a purchaser and a seller, but the lender needs to approve the buyer’s offer.
Buyers, sellers and lenders benefit from a pre-foreclosure deal. The seller is able to get rid of her unaffordable property without suffering from the charge damage of a foreclosure. A purchaser may be able to obtain the property for below market price. The lender benefits when the loan is acquired by a more financially stable buyer. Having a pre-foreclosure property, a purchaser is able to inspect the property until she makes an offer. At foreclosure auctions, this may not be possible.
Buying a pre-foreclosure property may take longer that purchasing a traditional property. The lender’s approval is essential for the purchasing process to begin. Pre-foreclosed homes may come with liens and unpaid taxes, which the new owner will be responsible for paying. Title searches will disclose any liens on the property. Pre-foreclosed homes may be in bad condition. Prior to buying a pre-foreclosed home, a buyer may want to think about how much it will cost to make repairs on the house. If he plans to quickly resell the home for a profit, he may want to consider that expensive repairs will quickly diminish his profit margin.
If a purchaser possesses basic home repair abilities, she has the potential to purchase a pre-foreclosure property inexpensively, fix it up and resell the house for a comfortable profit. The home does not have to be in bad shape to do this. By adding desired amenities and curb appeal to a decent pre-foreclosure house in a wonderful area, the purchaser can increase the home’s value and resell it at above market value. Pre-foreclosure earnings are better for creditors than foreclosures, so they want to close on the deal quickly. A purchaser may be able to negotiate lower closing costs, down payments and mortgage prices on a pre-foreclosure property than he would on a traditional sale.
Beginning the Buying Process
1 method to locate pre-foreclosures is to read default listings. When a purchaser locates a property of curiosity, she is able to contact the homeowner directly. If the homeowner has listed the property for sale, the purchaser contacts the listing agent. Realty Trac suggests contacting the homeowner by email with a postcard first, allowing him know you’re interested in purchasing the home and working out favorable conditions. After this, the purchaser or her real estate agent may try to speak to the homeowner in person or by telephone. A real estate agent can assist the buyer through the whole purchasing procedure.