Pre-foreclosures – Do Real Estate Investors Prefer Them over Foreclosures?
It’s unfortunate but foreclosed homes currently represent half of all of all the homes sold in the US. Before the bank forces foreclosure there is in a period called pre-foreclosure which can last anywhere from two to twelve weeks. Many of the real estate gurus have made a fortune on pre-foreclosures and consider it as one of the best, if not the best, way to invest in real estate.
Many houses that are ‘for sale by owner’ are houses that are in a period of pre-foreclosure. The lenders sometimes allow the homeowners to try to sell their home before foreclosing it. The banks are not in the real estate business themselves and would rather the owners sell the home instead of (the lenders) having to foreclose it.
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:
- Pre-foreclosed homes are sold for less than foreclosed homes. A homeowner will sell their pre-foreclosed home for low cost so they won?t have to face foreclosure.
- Since you won?t be at an auction, you will be given more time to talk to the home owner about any questions you may have concerning the house.
- You won?t have to worry about things becoming hectic like they would at a government auction.
- You won?t have to worry about becoming frustrated from losing a bid.
- You will be given more time to access and evaluate your finances before buying a pre-foreclosed home.
- You have more time to have a pre-foreclosed home inspected than you would at an auction. You will be aware of any potential problems the house may have.
- You don’t need all the cash up front like you would at an auction. You can pay a down payment for as low as a few hundred dollars!
Always check to make sure that the pre-foreclosed home you?re interested in has no liens or judgements against it. You should also bring along someone to inspect the home for you so you?ll know of any problems it may have. The risks in purchasing a pre-foreclosed home are similar to purchasing a home the traditional way, only a lot less expensive! You can even resell the pre-foreclosed home for more money than you purchased it for.