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.
A lot of times the banks don’t want to deal with having to foreclose a home, so they will allow the owners to sell it during the pre-foreclosure period. You can get a great bargain in buying a pre-foreclosed home.
Here are many advantages to buying a pre-foreclosed home from a homeowner rather than bidding on a foreclosed home at an auction:
- A pre-foreclosed home could actually be cheaper because you are dealing one-on-one with an owner who desperately wants to avoid foreclosure.
- Because you are working with the owner you’ll be able to ask questions about the property you wouldn’t be able to otherwise.
- Typically less competition then at a foreclosure auction. Foreclosures attracts more of the mass real estate market then pre-foreclosures do.
- More time to consider your finances before making the decision to purchase a home.
- Many people can become more emotionally driven during bidding and pay more then they had intended to.
- Less risk of potential problems because you can get a good look at the house ahead of time, and have it professionally inspected.
- 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 more cash up front.
As with any house purchase make sure you check for any judgments, 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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