As a homeowner facing foreclosure, it can be one of the most distraught positions to be in! On the other hand, It can be a great deal for Real Estate Investors. But pre-foreclosure can still offer some solutions to the homeowners that are trying to avoid a financial scar that is made to hurt. You can help these owners get out with only minimal liabilities.A pre-foreclosure is simply a borrower in default,even though they can be complicated, they also can be a good profit for the Investor.
If you are looking to buy pre-foreclosures,typically these are borrower/s who are in default and are trying to get out of the hardship they are facing. After doing some searching to locate pre-foreclosures(doing some due diligence, locating owners in NOD) and have had success in getting the borrower/s to meet with you, you are now in a position to negotiate with the homeowner and persuade them to agree to your offer,before you can negotiate with the lenders for a Short Sale. A good point to remember is to offer a price as low as possible after knowing the details of the scenario,and giving the borrower/s somewhat a peace of mind but not completely out of the woods.Homeowner/s still have some liabilities to deal with,but are a little more at ease knowing you have offered a solution to help them through their hardship.
After getting the borrowers to agree to your offer and signing a agreement that allows you to get information to their loan(reinstatement fees interest,etc..;)and also the lenders to respond, time will be of the essence.You will most likely have about three weeks to close on in a timely manner.You will be faced with some variables,such as title co. lenders, etc... Remember to include contingencies-subject to (seller financing,inspections etc.), this is what I like to call "My Insurance". Always including Exit Strategies will protect you just in case the deal is broke in regards to some of your agreements not being met, due to other extenuating circumstances .In some cases, if the pre-foreclosure stages were not completed and Foreclosure is evident, then the property most likely is heading to court-sort of speak. The property will be sold at the court house steps in auction,where the lenders and their attorney will be who you would be dealing with at this point and all cash will be needed to purchase.
Buying these properties before they reach the point of auction by the sheriff and lenders will probably be a better route to consider as a new investor.Knowing the foreclosure laws to the state that you plan on doing business in will be of much value.I hope this summary will be a guide to help you decide if its pre-foreclosures you want to persue or if the Short Sale is the the best route for the best possible outcome and thus being a win-win situation for all parties involved.
Remember that every circumstance is different and posses different variables that need to be dealt with in a timeline, and does not allow for much sitting around. I hope this "Glimpse at a Foreclosure"will enlighten you as to what are some of the hurdles you will face.One of my favorite websites that I like to review content from is reiclub.com, this site has very many successful Investors that contribute to it and can help you with some of your decisions, and not to mention questions you might have. Don't give up and always look up, as you continue to learn you will succeed, and we will continue to post and blog so that you can come back and
share and tell us about your success story and how you closed your very first Pre-Foreclosure,Short Sale or Investment !
Always Looking Up
Gregory Hernandez
