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 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.
- You will have the opportunity to ask the home owner questions concerning the home.
- Because the masses are more aware of where and when the government auctions are happening there are not as many investors competing for a pre-foreclosure property.
- More time to consider your finances before making the decision to purchase a home.
- Auctions can be a skill in itself and many people are not comfortable in that environment.
- You have time to have a pre-foreclosed home inspected resulting is less risk.
- You will be allowed to make a low down payment on a pre-foreclosed house. This is not the case at a foreclosure auction.
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.