Investing in the Pre-Foreclosure Stage

Investing in a foreclosed home is quite easy. Banks have a huge inventory of foreclosed homes and they regularly advertise auctions to clear out their stock. Most investors renovate the homes, flip them or rent them out to make a profit. This is a good idea but industry expert Jeff Adams points out that smarts investors know another option for making a profit. They invest in pre-foreclosures or homes that have not yet been listed on the foreclosure market to make a bigger profit.

How Does This Work?

 The pre-foreclosure is the first stage of the foreclosure process. The property still belongs to the homeowner but he has missed payments. As a result, the lender has started the process of claiming his property. During this time, the homeowner has the chance of selling his property and paying off the loan. This is a critical time for the homeowner but a very good time for an investor. If he can convince the homeowner to sell, he can buy the property for an affordable price before the house is taken back by the lender and auctioned.

Advantages of Investing in the Pre-Foreclosure Stage

  •  Homeowners who are in pre-foreclosure are usually motivated to sell. This is because they still own their property and by selling, they can pay off the loan and still have some money left over to invest in a new property.
  • As the owner is motivated to sell, they are usually amenable to discounts on the purchase price. With savvy negotiating, it is possible to buy property below market value as well.
  • As the homeowner is already in residence, they are actively maintaining the home. As a result, you are getting a home that is ready to move in. This might not be applicable for all homes but it is usually true. It is also advisable to check the home before you quote a purchase price to the owner.
  • The entire foreclosure process is anywhere from three months to six months long. To avoid the headache of an eviction and a public auction, homeowners are willing to sell. As a result, almost 90% of sales go through quickly and you can own the property.
  • You can buy the property before it goes to auction. This is a huge advantage as auctions are populated with serious investors who may be ready to buy homes at any price. Small buyers may find it difficult to pick up investment homes. By contacting the homeowner, you have a higher chance of buying the home without any competing buyers.

In Conclusion

Jeff Adams, the #1 real estate trainer, points out that pre-foreclosure homes are in far better condition than foreclosed homes as the homeowner is still in residence. As a result, investing in these homes is a very good idea. However, making a profit on these investments is entirely dependent on choosing the right home. It would be necessary to learn more about pre-foreclosure, how to pick pre-foreclosure homes, how to talk to homeowners, negotiate with banks, etc. With the right training and help, it is definitely possible to make profit quickly and efficiently.