Pre-foreclosures - Why Real Estate Gurus Prefer Them
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.
Many of the ‘for sale by owner’ signs that you see are from owners that are in pre-foreclosure. The bank usually allows the homeowner time in which to try and sell their home before it is foreclosed. This is common because the bank is not in the real estate business and would prefer the current owner sell the home to cut their losses rather then having to seize the home themselves.
Here are several reasons that real estate experts feel it?s a better idea to purchase a home during a pre-closure period instead of waiting to buy a foreclosed home at a government auction:
- A pre-foreclosed home could actually be cheaper then foreclosure 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 where there is multiple bidding for the same property. Foreclosures attracts more of the mass real estate market then pre-foreclosures does.
- You will be given more time to consider your finances before making the decision to purchase a pre-foreclosed home.
- Auctions can be annoying for some people. Some people become very angry when they are outbid.
- Less risk of potential problems because you can get a good look at the house ahead of time, and in some cases 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 the entire amount in cash.
As with any house purchase make sure you check for any judgements, 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.