Homereal estate investingWhat Are Pre-Foreclosures?

When a property is about to be put up for auction, or the foreclosure process has started and is close to being executed, the property is said to be in pre-foreclosure. This can be a great opportunity to buy a home at a huge discount, make a great profit and at the same time help someone avoid having a foreclosed home or property on his or her credit report for 7 to 10 years.  This could be a win-win for all.

Properties that are in pre-foreclosure get there for the same reasons that forelcosed propeties do.  People hit unexpected financial problems – loss of job, health issues, divorce, overspending or maybe even just the fact that an adjustable rate mortgage went up a few points and the homeowner can't afford it anymore.

In some cases, a homeowner will try to refinance but if there is not enough equity in the home or the person cannot prove to the bank how or even if they can refinance they can make the payments this may be impossible.

**Tip:  Equity is what the property is worth minus the amount owed on it. If the balance is $50,000 on a $150,000 home, then the owner's equity would be $100,000.

Often if there is no other choice, owners who cannot make their mortgage payments or refinance their property will have to let their property go to the bank of lien holder.

Owners who are in trouble may also panic.  They are so anxious to sell their home before it gets foreclosed on that they rush to put the property up for sale, even though they may be very inexperienced in the real estate market. Because they are inexperienced, they may price the property too high or too low. If the property needs to be fixed up, it can be even hard to find a buyer for it, especially if the ownes are in a hurry.

Unfortunately, there are property owners who are in denial and maybe I would be as well.  They can't believe this is happening to them, so they don't even try to do anything about it. Eventually they lose their homes to foreclosure and are forced to leave.

All of these cases are unfortunate and could happen to anyone.  Few things are more traumatic than losing your home.  As investors, we need to realize that by buying a home before it is foreclosued on, we could truly help these unfortunate owners out and also haveh the opportunity to make a fortune and become their problem solver!

Nancy Geils, Owner and Founder Investing with the Stars

Go to http://www.investingwiththestars.net/season2to sign up for free real estate investing FREE seminars and webinars.


Comments

What Are Pre-Foreclosures? — 2 Comments

  1. Hi I like your article and it was so informational and I am gonna save it. I Have to say the Indepth analysis you have done is greatly remarkable.Who goes that extra mile these days? Bravo.. Just one more suggestion you shouldinstall a Translator Application for your Worldwide Audience …

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