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Most people in the US are aware of the current real estate crisis and the unsettling fact that many people are losing their homes to foreclosure. Before a home is in the process of becoming foreclosed, it is in the pre-foreclosure stage. The pre-foreclosure period can last anywhere from a few weeks to a few months, and is considered by many real estate investors as the absolute best time in which to negotiate the purchase of a home.
Many houses that are ‘for sale by owner’ are houses that are in a period of pre-foreclosure. The lenders sometimes allow the homeowners to try to sell their home before foreclosing it. The banks are not in the real estate business themselves and would rather the owners sell the home instead of (the lenders) having to foreclose it.
Here are many advantages to buying a pre-foreclosed home from a homeowner rather than bidding on a foreclosed home at an auction:
- Pre-foreclosed houses are often cheaper considering as it’s being sold by a home owner that is in a hurry to sell to avoid facing foreclosure and the bad credit that goes along with it.
- 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.
- The situation allows for more time to evaluate your finances.
- Auctions can be a skill in itself and many people are not comfortable in that environment.
- Less risk of potential problems because you can get a good look at the house ahead of time, and have it professionally inspected.
- You will be allowed to make a low down payment on a pre-foreclosed house. This is not the case at a foreclosure auction.
Make sure you bring along an inspector when you check out a pre-foreclosed home. You should also check to make sure there are no past judgement liens or unpaid taxes on the property. The risks in buying a pre-foreclosed home are not that much more then buying a home the traditional way through a real estate company.
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