Pre Foreclosure Sale
of Real Estate

Investing in pre foreclosures has many benefits. The first piece of real estate I purchased was a pre foreclosure sale. I got a great deal and the couple who was in default with the bank was able to avoid foreclosure.

Pre Foreclosure is the time period between Notice of Default and the auction. If you remember from our Foreclosure page, Notice of Default is filed after a borrower has failed to make their loan payments typically for 90 days or more. The borrower has until 5 days before auction to bring their payments current to avoid foreclosure.

If the borrower can pay off the mortgage before the auction, this will greatly save their credit from further damage.

I like pre foreclosure investing because it helps people. In reference to the first home I bought, which was a pre foreclosure sale, the couple was getting a divorce and out of work. They were in a terrible situation. By selling their home to me at a discount, they were able to pay off their mortgage and move on with their lives. I purchased the home for $94,800 and sold it for $126,900 just a little over a year later.

A pre foreclosure sale allows you a little more time to due your homework on a property. The borrower in default has about 3 months in most cases before the auction. The time frame varies with certain states. This allows you time to get an inspection and check the property out.

How do I find a free pre foreclosure listing?

You can check with your county recording office or the county clerk. There are some websites out there, but going through the county's documents is free and will get you a jump start on other investors since most are too lazy to go to the trouble of looking through county's records.

You can also check out the Notice of Sale in your local county newspaper. Notice of Sale is posted 3-4 weeks before the first auction. This gives you a shorter window of time to due your due diligence on a property, but does open the chance to get a great deal since the borrower is probably sweating bullets at this point.

A lot of real estate investors will do direct mailers to the person. The mailer will advertise something to the effect of "Let us help you avoid foreclosure, we want to buy your house". I believe that if you are a little more personal you can beat these guys out.

Just remember, these people are facing something horrible in their lives. Be very sensitive and gentle. Let them know right off the bat that you hope that you can help them avoid foreclosure and move on with their lives.

In some circumstances, the borrower in default is actually a good person who had something tragic happen such as an unexpected medical bill or they may have lost their job. Bad things sometimes happen to good people.

If you run across this situation this opens up another opportunity for you to either rent the house back to them or lease to own. You could even sell it to them and owner finance. There is another page dedicated to seller finance so I will stop for now.

Investing in pre foreclosures also offers up another amazing, and one of my favorite types of deals and that is short sales! Short sales is when someone is in the pre-foreclosure stage and the bank is willing to take less than what the borrower owes to get the house sold. You can really get some bargains with short sales!

Click on the link that says "short sales" to read more. If you are a beginning real estate investor, investing in pre foreclosures is a great place to start.

• Short Sales Foreclosure

Return from Pre Foreclosure Sale to Straight Up Real Estate Investing