Pre-foreclosures – Why Real Estate Gurus Prefer Them
Posted on May 9, 2009 in the Pre-foreclosures category
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 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 some of the reasons many real estate professionals prefer purchasing a pre-foreclosed properties rather then waiting until they reach foreclosure:
- Pre-foreclosed homes are often sold for less than foreclosed homes. To avoid credit problems a homeowner is motivated to sell their home before the bank takes possesion.
- You will have the opportunity to ask the home owner questions concerning the home.
- There is usually less competition for a pre-foreclosed home than a auctioned foreclosed home. You won’t have to worry about placing the highest bid.
- 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.
- All you’ll need to buy a pre-foreclosed home is a down payment for as low as a few hundred dollars. At a government auction you would need more cash up front.
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.
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Very informative article.
I have been investing in pre-foreclosures becasue of the short sales that the banks are willing to do. We negotiate with the bank to get a lower pay off and save the homeowner from going through a foreclosure.
I’ve noticed, in Corona and around Riverside County (in California) that our inventory of available homes is so low that the pre-forclosure (shortsale) homes are going just as quickly and sometimes in a multiple offer scenario, which causes the pricing to increase. Is that happening in your area?