Pre-foreclosure Versus Foreclosures – Pros of the ‘Pre’


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It’s unfortunate but foreclosed homes currently represent half of all of all the homes sold in the US. Before the bank forces foreclosure there is in a period called pre-foreclosure which can last anywhere from two to twelve weeks. Many of the real estate gurus have made a fortune on pre-foreclosures and consider it as one of the best, if not the best, way to invest in real estate.

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 several reasons that real estate experts feel it’s a better to purchase a home during the pre-foreclosure period instead of waiting to buy a foreclosed home at a government 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.

– More time to consider your finances before making the decision to purchase a home.

– Auctions can be either overwhelming or lead to egotistical or emotional decisions.

– Less risk of potential problems because you can get a good look at the house ahead of time, and have it professionally inspected.

– 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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