An Investor’s Guide to Purchasing Pre-Foreclosures

Although investing in foreclosure properties is a standard strategy in real estate, many investors are unaware of the advantages of pre-foreclosure listings. To learn more about the pre-foreclosure definition, how pre-foreclosures differ from foreclosures, and how to acquire a house in pre-foreclosure, continue reading.

What Does the Term “Pre-Foreclosure” Imply?

Pre-foreclosure occurs after the property owner has received a Notice of Default, but before the property has been posted for sale in a pre-foreclosure auction. Although purchasing a pre-foreclosure can be difficult, investors typically find that it is well worth the effort because they can often be purchased for less than market value.

Pre-Foreclosure Vs Foreclosure

A pre-foreclosure listing and a property that has gone into foreclosure are two different things. When a homeowner defaults on their mortgage payments, the property goes into foreclosure. As collateral, the lending institution takes possession of the property. The lender will re-list the property for sale once it is under foreclosure, usually at a reduced price.

As previously stated, a pre-foreclosure process occurs when the owner has received a default notice but has not yet been foreclosed upon. As a result, pre-foreclosure homes aren’t always for sale until they’ve officially entered the foreclosure process.

Investors who locate owners at the pre-foreclosure stage have the advantage of negotiating a bargain before the property is posted on the market. Pre-foreclosures can be a good investment because they are frequently offered at a discount, and the seller may be more motivated to sell than a homeowner facing foreclosure.”

Pre-Foreclosure Listings: Where Can I Find Them?

• Notices of Default (NOD) are frequently lodged with your local county court, while laws and rules change from state to state. Ask your local county court office if you can search through their NOD filings and how you may do so.

• Online records: Some counties make their property databases available online. To see if this service is available in your area, go to your county’s website or use search terms like “property data” followed by your county’s name. You should be able to find any online records that are offered from there. Most county databases allow you to filter searches by property or document type, which will assist you in compiling your pre-foreclosure list.

• Legal notices: You can also search the legal notice section of the newspaper for homes that are up for pre-foreclosure auction. Pre-foreclosure listings that will be sold at a foreclosure auction will be published in this area. You can utilize the property information to find the title company who filed the NOD, and then contact them for a list of pre-closure leads. However, keep in mind that in exchange for their lists, this organization may want you to use them for your pre-foreclosure sale closing.

• Real estate agents: Because they have access to the MLS, real estate agents are a good place to start looking for pre-foreclosure lists. They can use the MLS to limit their search to solely pre-foreclosure listings. Using a real estate agent ensures that you receive professional assistance and that all of the heavy lifting is taken care of for you. You may rest assured that any paperwork will be handled swiftly and appropriately. They’ll be able to locate a pre-foreclosure listing, make any necessary appointments, and negotiate properly in your place. You’ll have to compensate your agent, which means the pre-foreclosure listing will be priced more to meet your agent’s fee. You’ll also have to work around your agent’s schedule the majority of the time.

• Attorneys and wholesalers: These experts are accustomed to working with pre-foreclosures, so if they are willing to share their leads with you, they could be a great source of leads. Network and establish ties with real estate, bankruptcy, foreclosure, and probate professionals, as well as any wholesalers in your area who have established buyers lists.

Contact me if you’re interested in a pre-foreclosure list for Maryland and Washington, DC. 240-447-8200, anna@annareedrealestate.com