When a homeowner
doesn't make payments on time, the loan goes into what's called
"default." This is the first step of the foreclosure process. The
lender will file a notice of default - which is a public document - and the
home will go into the pre-foreclosure process.
When foreclosed homes for sale are available, it's because the owner has agreed to sell the
home on the condition that the bank or their lender will accept a lesser amount
than what's owed.
Buying a pre-foreclosure home can be a
great way to save money without competing against all the investors who focus
solely on foreclosed homes. However, former owners who lose their home to
foreclosure or pre-foreclosure often leave behind a less-than-pristine
property. In this article, we'll cover how you can find a pre-foreclosure
property that won't be a money pit.
When purchasing a pre-foreclosure home, you
need to:
·
Negotiate, negotiate and negotiate.
Remember, the seller is very motivated and eager to sell, so the buyer is in
the preferred position. While foreclosed properties are often offered at
auction, pre-foreclosure properties are typically sold by the owner or the
trustee, meaning you're in a better position to negotiate.
·
Inspect. While you should
always inspect a home before you buy, it's even more important to have a
foreclosure property fully inspected. If you're buying the home at auction,
consider hiring an inspector to attend the viewing with you.
·
Ask for a written disclosure of
the property condition. While this isn't always possible and many foreclosure homes or pre-foreclosure
homes are sold as-is, you can sometimes ask for a list of all the defects
you're accepting with your "as-is" purchase.
·
If you're buying a foreclosure
or pre-foreclosure property, look for loans or financing options that are
targeted specifically toward foreclosure homes.
·
Use an agent that specializes
in foreclosure and pre-foreclosure properties. An agent that knows how to
navigate the foreclosure system is worth the cost and can save you a lot of
money and headaches in the long run.
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