Pre-foreclosure Versus Foreclosures – Pros of the ‘Pre’
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 to purchase a home during the pre-foreclosure period instead of waiting to buy a foreclosed home at a government 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.
- 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.
- 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.
- The situation allows for more time to evaluate your finances.
- Many people can become more emotionally driven during bidding and pay more then they had intended to.
- 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 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.
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