Revealed: The 5 Step Process to Buying Pre-Foreclosed Properties

A foreclosure is usually the last step taken by the lender after all options of recovering the money due from the home owner have been exhausted. Pre-foreclosures occur immediately after a house has been repossessed by the bank and before it is officially on the market

Depending on the state, the wait period varies from 25 days to 245 days once the foreclosure notice is sent to the time when the actual foreclosure occurs. This time is given to the home owners as last resort to see if they can repay the debts before bank repossesses their property. When you purchase the property during this waiting stage, it is a pre-foreclosed property purchase.

 Jeff Adams, the real estate mogul shares the step by step process for buying pre-foreclosures. Buying a pre-foreclosed home is often known as a short sale because you will essentially be buying a house before it is up in the market.

1. Find the Right House

 The first step to finding the perfect house, pre-foreclosed or otherwise, is to determine what kind of home you are looking for. Once you determine this and have decided on an approximate price range, you can focus your search to meet your requirements. Speak to your realtor and provide your exact requirements to him so he can get in touch with you if he comes to know of any pre-foreclosed houses that meet your requirement.

2. Home Inspection

 Ensure you carry out a thorough and complete home inspection before buying the house. If the house is in a potentially dangerous zone for natural disasters, then could be looking at expensive repairs. Have a professional assess the damages in and around the house and divide the financial responsibility for repairs between yourself and the lender.

3. Keep Your Finances in order

 Pre-foreclosed property deals are concluded at alarmingly quick rates. To make sure you don’t lose out on your dream home, have your finances ready so you can quickly capitalize on a house that is not yet on the market. The down payment is usually done in cash; so while we are not suggesting you carry piles of money around, having easy access to cold hard cash may help smooth the sale over.

4. Draft an Offer

 If you see a house and it meets all your requirements, get your lawyer to review the documents on the house. If need be, draft a fresh agreement stating your terms and conditions and work them into a legal document. Jeff Adams cautions you to include only basic clauses into the contract as the lenders may not be too accommodating of your demands. Once the documents are signed and the down payment is made, you are the official owner of your new house.

5. Have patience

 There have been instances where due to legal red tape, there is a lag between you signing the papers and the previous owner vacating the home. Have patience and wait it out.

If you are a newbie to real estate investing, get in touch with Jeff and his team. They’ll be happy to guide your though the process.