Real Estate – Is a Preforeclosure a better investment then a Foreclosure?


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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 of the ‘for sale by owner’ signs that you see are from owners that are in pre-foreclosure. The bank usually allows the homeowner time in which to try and sell their home before it is foreclosed. This is common because the bank is not in the real estate business and would prefer the current owner sell the home to cut their losses rather then having to seize the home themselves.

Here are several reasons that real estate experts feel it?s a better idea to purchase a home during a pre-closure period instead of waiting to buy a foreclosed home at a government auction:

– Pre-foreclosed homes are sold for less than foreclosed homes. A homeowner will sell their pre-foreclosed home for low cost so they won?t have to face foreclosure.

– You will be given good opportunities to ask the home owner questions concerning the home.

– You won?t have to worry about things becoming hectic like they would at a government auction.

– More time to evaluate financial scenario then at an auction.

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

– You can bring an inspector along with you to inspect the pre-foreclosed home. You will be given more time to have it looked over.

– You don’t need all the cash up front like you would at an auction. You can pay a down payment for as low as a few hundred dollars!

As with any house purchase make sure you check for any judgements, or liens against the estate. Bring along someone how is familiar with buying real estate and if possible have the house professional inspected. The risks are comparable to a traditional type of home purchase but with the advantages of foreclosure discounted pricing.

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