Government Auctions – Difference between Preforeclosures and Foreclosures
Most people in the US are aware of the current real estate crisis and the unsettling fact that many people are losing their homes to foreclosure. Before a home is in the process of becoming foreclosed, it is in the pre-foreclosure stage. The pre-foreclosure period can last anywhere from a few weeks to a few months, and is considered by many real estate investors as the absolute best time in which to negotiate the purchase of a home.
Many of the ‘for sale by owner’ signs that you see are from owners that are in pre-foreclosure. The bank usually allows the homeowner time in which to try and sell their home before it is foreclosed. This is common because the bank is not in the real estate business and would prefer the current owner sell the home to cut their losses rather then having to seize the home themselves.
Many Realtors agree that buying a pre-foreclosed home is an excellent idea. Here are many advantages to buying a pre-foreclosed home from a homeowner rather than a foreclosed home at a government auction:
- Pre-foreclosed houses are often times cheaper considering it?s being sold by a home owner that is in a hurry to sell it before facing foreclosure.
- You will be given good opportunities to ask the home owner questions concerning the home.
- Typically less competition then at a foreclosure auction where there is multiple bidding for the same property. Foreclosures attracts more of the mass real estate market then pre-foreclosures does.
- You won?t have to worry about becoming frustrated from losing a bid.
- Auctions can be either overwhelming or lead to egotistical or emotional decisions.
- You have more time to have a pre-foreclosed home inspected than you would at an auction. You will be aware of any potential problems the house may have.
- You don’t need all the cash up front like you would at an auction. You can pay a down payment for as low as a few hundred dollars!
As with any house purchase make sure you check for any judgements, or liens against the estate. Bring along someone how is familiar with buying real estate and if possible have the house professional inspected. The risks are comparable to a traditional type of home purchase but with the advantages of foreclosure discounted pricing.
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Tags: foreclosures, pre-foreclosures, bank mortgages, pre-foreclosure