Buying pre-foreclosure is one of the popular approaches in getting foreclosure. For your info, pre-foreclosure happens when home owner has missed at least one payment of the loan. The lender will then issue a Notice of Default which is a public record asking the home owner to respond to the un-paid payment/loan. This is the first legal stage of a home being foreclosed. Home owners have to respond fast to show their motivation to solve the problem. At this stage, the owner still has a chance to stop the foreclosure process by paying off the loan. The preforeclosure process will usually take up to months and therefore you will have to be patient in approaching the owner.
To start your first step, you could contact the trustee and attorney in checking the availability of the pre foreclosure. After confirming the status, you could then contact the owner through phone. Make sure you show your friendliness as house owners often time are facing financial stress at the time. Only pay the visit to the property and meet the owner in person if you have experience in dealing with it.
In this approach, there are always advantages and disadvantages of buying pre-foreclosure.
- Sale agreements are adjustable and flexible.
- 40% below market value foreclosure home.
- Adequate time to research on the conditions of foreclosure home, title and the hidden liens.
- Lesser down payment (cash).
The most difficult part in buying pre foreclosure is getting in touch with foreclosure owner. There are not only you who are trying to contact the owner. Imagine the owner receives 10 to 100 calls each day while dealing with financial stress. That will drive a person crazy. But as an investor you need to understand that if you manage to buy the pre foreclosure, you have not only earned yourself a good chance but also have helped the owner in getting rid of bad marks in the credit which often time overlooked by the house owners who take investors as hostile buyers.
- Ití»s sometimes hard to reach the foreclosure home owner.
- Possibility of dealing with other liens.
- Documentation works needed to be settled by buyers themselves.
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