The pre-foreclosure stage of a home is the stage in which the property is not on sale yet, and the homeowner is sent a notice of default due to his / her failure to pay back the loan borrowed from the lender. In the pre-foreclosure stage of a home, the homeowner can resort to finding means to pay back the loan and thus, still has a chance to prevent it from being foreclosed. This makes this stage a tricky one to buy from.
Experts believe it is the stage in which many good bargains can arise to purchase the property, but it is also difficult as it is a crucial time for the homeowner in the entire foreclosure process. The homeowner may be more determined on keeping the property than allowing it to be foreclosed and you may lose your opportunity to make a good deal out of it.
Jeff Adams, real estate investment guru, strives to educate beginner investors about how to make the most of such opportunities in the real estate market. One can make a good profit when dealing with property that is potential foreclosure property.
Read on to find out how you can go about making a good deal with property in its pre-foreclosure stage.
1. Develop a System that Informs
Develop a mechanism by which you can stay informed about property that’s going to be foreclosed. See that you receive up-to-date information so that you can act quickly to make a purchase. After having received the information, it is always good to examine the property yourself, study the location, the community and neighborhood, etc. If you’re lucky you get to have a chat with the owner himself, or sometimes, you gain access to information about the property from neighbors.
2. Check the Market Value
Look into the market value of the said property. You want to be fully informed of the property you purchase, so do your research and check how much the owner is in debt, how much the home was originally purchased for, etc. This will help you make a decision fast enough so that you can contact the defaulted owner.
3. Contacting the Owner
Contact the owner of the property, conveying to him that you are interested in buying the property. It is good to contact the owner through mail. However, don’t be disheartened if you don’t receive an immediate response. Most states allow the homeowner a period of time between the foreclosure notice and the actual foreclosure bidding, just in case the homeowner is keen on keeping his home and is trying to generate funds to finance it. Usually though, homeowners cannot make up the necessary funds to keep the property.
4. Negotiate a Price
Meet with the homeowner and negotiate a price that’s suitable for both parties. Keep in mind that he wants to make something out of this exchange too and it is a stressful sale for him. For example, some homeowners will settle for a price if you offer them a good number of days until they have to evacuate the home, because it gives them time to find another place to live in.
5. Put in Writing
After all of this, your purchase agreement needs to be put in writing, it is convenient to get in touch with a real estate agent, who will take care of all the legal documents and formalities that go into purchasing property that’s in its pre foreclosure stage.
You will see that you can make a good investment from such a purchase, compared to other real estate purchases.
