A pre-foreclosure list is a great way to find a bargain when hunting for real estate, however, it requires a rapid response to capitalize on a discounted house before it goes to auction. Whilst many people will look to a pre-foreclosure list when considering moving home, few are prepared for the fast action required to complete a quick purchase.
A house on a pre-foreclosure list won’t wait for a buyer to slowly arrange their finances. Sales typically occur when the owner can no longer meet the mortgage payments, and sell the home before it is repossessed and their credit score is badly damaged.
Pre-foreclosure sales happen fast, and so to truly capitalize on the reduced value, you have to be ready to move quickly too. By following these simple steps, you will never miss out on the best real estate deals again.
Sourcing a Home
Discovering a pre-foreclosure list isn’t difficult. The information is available from public records in the county courthouse, and local newspapers will often list pre-foreclosures in your area. The internet has many websites which offer pre-foreclosure listings, or if you prefer the human touch, contact a real estate agent who will let you know what is currently available in your market.
Approach the Owner
When making the first contact with the homeowner, discretion and sensitivity are advised. A difficult financial situation can be very stressful, and so a gentle approach is recommended when you first come to discuss the sale of the house. Contact the owner by letter or phone call, try to arrange a suitable time to meet and view the property. Taking a tour of the home, you should make a note of any necessary repairs or renovations. Accuracy here will translate to financial accuracy when you come calculate your valuation.
Define the Financial Situation
A pre-foreclosure should come with a wealth of information about the status of the property, from which you should be able to calculate the value of outstanding payments due to the foreclosing bank. You should have the owner sign a disclosure authorization, which will give the bank the right to release the full information to you. The financial situation can change regularly as payments are made or missed, a real-time update from the creditors will arm you with accuracy.
Valuation and Negotiation
There is a lot of data available for real estate buyers in the modern world of information technology. Previous sales in the area will give you an idea of the market value for a specific neighborhood, whilst foreclosure estimates are also readily available. When it comes to negotiating, bear in mind that each pre-foreclosure sale has its own unique set of circumstances. Armed with all the information, you should be prepared to make an offer which would satisfy the current owner, whilst also giving you a huge saving.
Draw a Purchase Agreement and Move the Money
Once your offer has been made and accepted, it is time to move quickly. Any dilly-dallying at this stage could mean the house goes through to auction, meaning you miss out. Draw up a purchase agreement, once the deal is in writing you can approach an escrow company who will manage the transfer of money and property ownership.
Image Courtesy Flickr and Dave Parker