Please read this article and then get George Roddy, Jr’s Recap (bottom)
The term pre-foreclosure, just like it sounds, means that a property or home is about to go into foreclosure. You can get some great values here, before they are seen by the masses looking for foreclosure deals. Prices are generally directly negotiated with the owner, who is motivated to avoid foreclosure.
Pre-foreclosures properties are increasing in numbers every day. Real estate agents understand that investing in pre-foreclosure homes is definitely one of best ways to secure a profit. The timing couldn’t be better then now to get involved in the real estate game because of the sub-prime crisis and other external difficulties facing home owners today.
Depending on your situation buying a pre-foreclosure home can be an improved method of acquiring property rather then buying at an auction. Auctions more often then not require that you have the necessary cash on hand in order to bid. When buying pre-foreclosure homes, however, you don?t necessarily have to have cash on hand.
In the pre-foreclosure sale, you will personally meet and work directly with the home owner. Although the owner may be distressed about loosing their house, by the time you arrive they may see you as someone that can help salvage something before foreclosure.
One of the biggest advantages of purchasing a pre-foreclosure over an auction is that you can inspect the property before it goes into auction. At this point the property owner is still living in the home so obviously you want to call on them and take a look around the house to see what kind of condition it is in. If the owner feels you make be able to help them, they may disclose if there are any internal problems with the house (i.e. water damage, electrical issues, etc.). Also if the owner is co-operative and you have enough time it would be advised to get a property inspection done as well.
This allows you to determine how much effort, if any, will be required to repair the house and at what cost. This will eliminate much of the risk and will help you make a better decision about if the property would be a good investment or not.
Hopefully this article articulated some of the advantages that buying pre-foreclosures is a good alternative. All real estate professionals consider this method as one of your best value options when it comes to purchasing a home
Roddy.com’s Article recap:
First of all, I think this was a well written article and the author makes some valid points about buying BEFORE the courthouse auction versus AT THE AUCTION. I have to agree that buying before the auction is the buying strategy of choice and here is why: You don’t have to pay of the delinquent debt! For the past 10 years, when I have a owner that wants to sell their house, the #1 thing to find out is “what does the owner/seller need in CASH.
For example, here is what I might say to a distressed owner that shows any interest in selling to me:
(George Roddy, Jr.) Mr / Mrs. Jones, if I can close quickly (say in the next few days), stop the foreclosure auction and put MONEY in your pocket, would that be OK with you?
(George Roddy, Jr.) OK great, It’s my opinion that in every real estate transaction both parties need to BENEFIT in some form or fashion, sometimes you may not get as much money as you would like but there are other benefits that come from this transaction, so I need to ask you, what is the minimum amount of MONEY that you would be willing to accept if I can close quickly, help you avoid foreclosure and put money in your pocket?
You want them to tell you what they want, then you counter if you feel that amount would not be in your best interest.
Finally, let’s talk about NOT paying off the loan. As you know, it is very difficult to get a loan right now and it is even harder to get a LOAN, CLOSE and FUND in less than a week. What I have found is that getting a loan from a bank in the 21 day Texas foreclosure time line is not probable. What I would suggest is that you bring the delinquent loan current (its called REINSTATING) instead of “paying off the loan”. When you bring a delinquent loan current, the bank is satisfied and has no reason to foreclose on the loan/lien. There are specific steps to do this correctly, and we cover these in our How to Buy Texas Foreclosure course (live or home-study) at www.Roddy.com or contact us at 214-593-0074.
I hope this has helped.
George Roddy, Jr.
P.S. – If you know anyone that needs to sell a property, I am looking to buy 30 investment properties in 2011.