subject: The Potential In Preforeclosures [print this page] Preforeclosure is the grace period to a piece of property before foreclosure. When the owner is behind on payments or if they have incessantly failed to pay their due, the bank will initiate a foreclosure but you as the owner still has a possibility to sell the property just until the foreclosure auction.
As a homeowner, you still have the chance to avoid full foreclosure by reinstating the loan and pay the default portion or put the property up for sale at a public auction during preforeclosures. There are also a lot of potential buyers who are willing to obtain a property especially at a reduced price. So even if the foreclosure intent has been served, the property is still yours so you still have the right to do whatever you want with it, so take advantage of this period before the actual auction occur.
This is also a excellent time for investors to locate these homeowners, as preforeclosures can be a big chance to buy a property at a discounted value. If you are interested in acquiring a preforeclosed home, you will have to get in contact with the homeowner and let them know that you are there to help them. As much as possible the owner will try to stop getting a bad credit record. Most homeowners will sell the property at a lesser price to prevent total loss and just sufficient for them to pay off their mortgage and get something back from their equity.
You will not only salvage them from bad credit and foreclosure but this is also a great venture while maintaining the propertys value. So expect that you are not the only whos aiming to get these type of properties. It is normal to have a competition in every business especially in real estate as preforeclosures are known to be one of the profitable investments but you have to anticipate that this type of venture can also be time consuming. Not only are the homeowners flooded with phone calls and letters from bill collectors, attorneys and creditors but some may have just left town and it will be not be easy to track them. But as you may get hold of them, you will also have to convince them to sell the property to you.
The only way to contact the homeowner is through mail, phone or in person. As soon as you find these owners, start by sending them a letter of intent to buy their property and that you can also aid them with their current financial problem. Let them see the benefit that they can get if they will let you help them stop their home form foreclosing, help them with their bills and at the same time save their credit rating. Show sympathy and empathize with the homeowner and act professional in all your correspondence. give them some time to think and assess their options before you follow a letter if you have not heard from them.
If you can give them a call, just be courteous and patient don't be pushy because they may not react well to being pressured when they already are now that they are facing foreclosure. When you get to speak to them and if looks like you can help them out, ask if they will agree to have a face-to-face meeting with you. So before you meet with the owner, you will need to asses if the owner only needs money. Or if they are willing to file bankruptcy if they dont get what they want or they are just simply waiting to bail them out of their dilemma? As these questions are imperative in deciding on how you can help them.
Review their loan and mortgage papers, find out if there are existing liens associated with the property. Inspect the home before making any offer. There is a great potential in making it big in preforeclosures but the only drawbacks are the amount of time and proceedings. So make sure that you pick the right property by finding out the market value, then minus the default amount to find out if the gross equity is indeed large enough to be considered a worthy venture.
