For those seeking affordable homes, a home in pre-foreclosure could be an appealing option. Searching listings illustrate the numerous pre-foreclosure homes available – but is this a doable option? Let’s take a closer look.
What is Pre-Foreclosure?
A home in pre-foreclosure is a property in distress – the current buyers haven’t been making payments, but the lender has yet to repossess and resell the property. Owners usually still occupy these homes. These occupants, once the home is in pre-foreclosure, have received default notices. Even in pre-foreclosure, the occupants might still be searching for ways to remain in their homes. In other words, a home might be in the pre-foreclosure stage but not be up for sale.
Buying a Pre-Foreclosure Property
If a home in pre-foreclosure is up for sale, it’s listed as such – or as a short sale – on ProspectNow. Short sales occur when defaulting homeowners sell the home to avoid foreclosure.
If a home hasn’t been listed as a short sale, take a look at public notices in your local newspaper. You can always reach out to the homeowner to see if they want to sell their home. Just remember kindness and respect when approaching a distressed homeowner – in fact, depending on the state, you may not be allowed by law to contact homeowners.
Buying a pre-foreclosure home or land doesn’t necessarily mean you’ll need a mortgage or a down payment. This isn’t the average home purchase. Rather, whatever is left owing on the current owner’s loan is what you’ll need to come up with, in addition to any insurance premiums the owner still owes. If you’re able to pay in cash, the process can be a lot smoother.
Where to Find the Best Pre-Foreclosure Leads
You can explore several options to discover pre-foreclosure leads. How much time you want to invest in your search makes all the difference. Here are a few places you can start your search for pre-foreclosure leads:
An online directory, like ProspectNow
Online directories are the perfect place to start. With just a few mouse clicks, you’ll find hundreds of leads, plus photos and property descriptions. You can filter properties by type, budget, rental potential, and location to find just the right property for your needs. Using an online portal like this means all the research has been done for you, leaving you time to filter based on the above requirements. When you’re ready to make contact, all the information is at your fingertips.
Agents
Realtors and other estate agents are able to access the MLS, or multi-listing service. This database showcases all the houses and other properties for sale across the nation. Plus, a real estate agent can act on your behalf and negotiate with owners for you. Your agent can get you information like property taxes, the amount of the previous sale, and square footage, among other things.
Public records
Then again, if you prefer doing things on your own, pre-foreclosure listings are also available at your local county clerk or recorder’s office. You’ll be looking specifically for such things as Notices of Sale and/or Defaults. These notices are delivered to the property owners and recorded publicly. You can find information such as the owner’s names, address, amount owed, and the bank or lending institution to which the amount is owed.
The only drawback is that public records are only kept for the notices given – there are no property photos or detailed descriptions that might help you decide if it’s a property you’d be interested in further. Plus, there can be a lot of information – so much, that it can make this route a tiresome process.
Newspapers
When any foreclosure process begins, the owner receives several notices – the Lis Pendens notice is what appears in your local newspapers’ legal section. This information might even be in the online editions. If there is any litigation involving a property, it will be in this section. The notice normally will list the address of each property in question, giving you instant access to pre-foreclosure leads. While some interested parties may take a drive over to the property in question, it’s a good practice to reach out to the current owners by phone, email, or postal mail prior to showing up at the physical property.
Real estate attorney
Real estate attorneys represent the current owners whose properties are in pre-foreclosure. Creating a relationship with these types of attorneys is just one way you can get information – sometimes even first-hand knowledge – before it goes on public record. In other words, you can have your pick of local pre-foreclosure leads before others even know they’re available. You can get to know these attorneys by taking part in real estate events near you or by asking for a referral. It’s important to note, however, that no matter the type of rapport you build with a real estate attorney, some charge a fee for every lead they provide.
Finding the Best Pre-Foreclosure Leads
Finding a home in pre-foreclosure is an excellent way to pay much less than the home is actually worth. And you won’t face as much competition as you might at an auction for a home already in foreclosure.
But before you consider buying a pre-foreclosure home, dig into the laws in your state regarding distressed properties. You might find that the majority of buyers investing in pre-foreclosure homes have been doing it awhile – they’re not first-timers.
Buying a pre-foreclosure home is a tricky process. Having a good amount of cash for bargaining doesn’t hurt – as well as a dash of savvy negotiation skills.
ProspectNow has been helping people, homebuyers, and real estate agents since 2008. It’s the best of both worlds – ProspectNow puts interested potential buyers in touch with the real estate brokers that can help make their dreams of homeownership a reality. Real estate brokers using ProspectNow can close more deals and – bottom line – make more money.