Purchasing a Home in Pre-Foreclosure

            by Greg Cryns

            One way to get a great deal on a home is to purchase a home that’s in pre-foreclosure.  What this means is that the owner is defaulting on their mortgage.  In other words, they haven’t made payments in several months.  However, the owner may be 

interested in selling the property in order to avoid having a foreclosure.

            You can find pre-foreclosure properties by checking with your local county courthouse.  There you’ll find notices of people who are unable to pay their mortgages or taxes.  Once you find the listings, you’ll want to drive by the properties to see if they’re up to your standards for a piece of property you want to buy. 

            If you’ve driven by and you like what you see, you’ll then need to contact the owner directly.  Because they aren’t in default yet, you’ll be dealing with them instead of a lending institution or auction.

            However, you may also want to talk with the lender.  By working with both the bank and the homeowner you can strike a deal that will make everyone happy.  You’ll get a great deal on a home and the homeowner will avoid foreclosure.  The bank will also be happy not to have to pay for the legal proceedings of foreclosure and cheap sale of the property.

            There are several ways that you can take over the new property.  In some cases you can simply take over the mortgage payments by following the “quit claim” process.  This will allow you to transition to the new property quickly and easily.  In other cases you can go with a new mortgage and buy out the previous owner who is in default.

            When choosing pre-foreclosure properties, you need to make sure that you get the best product for your money.  Make sure to walk through the house and see what kind of condition it’s in.  In addition, you should have it inspected to make sure it’s in good repair.

            Many people who are in pre-foreclosure are in so much financial trouble that they can’t make necessary repairs.  However, you need to keep a running tab of what repairs need to be made.  Then you can use that cost to negotiate the price with the homeowner and the lender.

            Overall, buying a pre-foreclosure can provide you with a nice home for a great deal.  Unlike foreclosure auctions, there’s usually not a whole lot of competition when it comes to buying a pre-foreclosure home.           

            While it does take a little more leg work, purchasing a pre-foreclosure can help you to save tens of thousands of dollars on the cost of your home.  If you’re looking to for a great deal, this may be the way to go.

 

Greg Cryns is the owner of Flat Fee Real Estate Guide - http://www.flatfeerealestateguide.com