A pre-foreclosed home is a home that has reached the final stages before it is ultimate repossessed, or taken back by the bank or lending institute that issued the mortgage loan. During the pre-foreclosure stage, the owner still assumes control of the home in the hopes that they will rectify excessively late payments. If payments are made and the loan becomes current, the homeowner can quickly get out of this stage, however, this is not always the case.
Why Pre-Foreclosure Homes Appeal to Lenders
When it comes to real estate investing, there are several benefits to investing in pre-foreclosure homes. Unfortunately, many home buyers miss out on great pre-foreclosure deals because they are not familiar with the process of buying these types of homes as well as the benefits that come along with them.
By far, the greatest advantage to buying a pre-foreclosure home is the great price tag that comes attached with them. As is typical for most pre-foreclosure homes, the home owner is forced to sell their house since they are unable to make payments. Given the “need” to sell, most homeowners will list their home far below its value, or will give heed to almost any offer that is submitted to ensure that they can rid themselves of the home before it goes into foreclosure status – thus negatively affecting their credit.
Given the immediate need to get rid of the home, many pre-foreclosure investors can find great deals on homes, oftentimes up to 50% off the market value of the home.
Less Hassle When Buying Pre-Foreclosed Homes
In addition to getting bargain prices when buying pre-foreclosure, as an investor, you have the added luxury of avoiding the messy process of buying a home that often involves third parties. In the case of most pre-foreclosures, you can deal with the owner directly instead of through various channels of communication. During this time, you both can negotiate on a selling price that is beneficial to the seller and economical for you (the investor).
How to Find Pre-Foreclosure Properties
When searching for pre-foreclosures, the process does not greatly differ than if you were looking for a home for sale that a bank already has control of. To begin your search, consider contacting your local assessor’s office as well as looking online, in your local newspaper, or by contacting lenders directly.
Once you have located a pre-foreclosure home that interests you, consider contacting the home owner directly. If you’ve gone through a lender to find the home, check to see if the homeowner’s contact details can be provided since you may be able to help them save their home.
From here, sealing the deal and purchasing a home a bargain prices becomes even more of a possibility. Pre-foreclosure properties are a great investment, and overtime, can help you increase your rate of return immensely.