Due to the recent real estate collapse, many people across the United States are losing their homes to foreclosure. The period of time before the official foreclosure is called pre-foreclosure. Depending on the state the pre-foreclosure period lasts from seven days to a 60 days. Real estate experts know that the pre-foreclosure period is a great time to purchase a home.
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 many advantages to buying a pre-foreclosed home from a homeowner rather than bidding on a foreclosed home at an auction:
- Pre-foreclosed houses are often cheaper considering as it’s being sold by a home owner that is in a hurry to sell to avoid facing foreclosure and the bad credit that goes along with it.
- 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. Foreclosures attracts more of the mass real estate market then pre-foreclosures do.
- More time to consider your finances before making the decision to purchase a home.
- Many people can become more emotionally driven during bidding and pay more then they had intended to.
- You can bring an inspector along with you to inspect a pre-foreclosed home.
- You will be allowed to make a low down payment on a pre-foreclosed house. This is not the case at a foreclosure auction.
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. The risks in purchasing a pre-foreclosed home are similar to purchasing a home the traditional way, only a lot less expensive.