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Pre-foreclosure sale: how to work with homeowners

If you are interested in a pre-foreclosure sale, you may be able to work with the homeowners to help them avoid foreclosure and get you a good price on your new home.

A short sale is a type of pre-foreclosure sale.If you are interested in a pre-foreclosure sale, you need to know how to find them and how to work with homeowners. You may be able to help a homeowner avoid foreclosure and get a good price on your new home.

Finding pre-foreclosure sales

Typically, a homeowner has missed at least one payment before he or she gets a Notice of Default (NOD) from the mortgage lender and the home goes into pre-foreclosure. If the homeowner cannot make the delinquent payment or continues to default on the mortgage he or she will also receive a Notice of Sale (NOS), which sets an auction date for the home. You may buy a home in a pre-foreclosure sale up to the day it is auctioned.

Both the NOD and NOS are filed with the county court and published in the local newspaper, alerting you to opportunities for a pre-foreclosure sale. Keep in mind that these notices do not indicate that the homeowner wants to sell. He or she is struggling to pay the mortgage. So, if you choose to inquire about the home, it is best if you send a letter or postcard rather than go to the front door. If you are working with a real estate agent, your agent may be able to research the property and contact the owners for you.

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Short sales

A pre-foreclosure sale may be a way to get a home for less than market value. You may also buy a home in a short sale. A short sale is when a mortgage lender agrees to let the homeowner sell the property for less than is owed on the mortgage because the value of the home has dropped significantly. In this case, the home will probably be priced close to market value, yet the price will be much less than the homeowner paid. The lender must approve your offer in a short sale. 

A pre-foreclosure sale can have many advantages. One is that the homeowners are motivated to sell to avoid foreclosure. Another is that a home in pre-foreclosure still has utilities on, which facilitates the inspection process. Plus, you are able to get an inspection which is not the case when you buy foreclosed homes at auction. Pre-foreclosure sales often have less competition from other buyers than an auction. Your sale may have no competition if you or your agent contact the homeowners personally before they list the home.

Home pre-foreclosure sales are listed with real estate agents or on for-sale-by-owner websites. You may also notice a sign in the home's yard. The U.S. Department of Housing and Urban Development (HUD) has a pre-foreclosure program that requires homeowners actively market the short sale for at least three months.

To learn more about pre-foreclosure sales, go to this article. It provides more information about find these homes, contacting the owner and financing options. If you want to learn how to find foreclosure listings and buy foreclosed homes, this guide will help.

A real estate agent who specializes in foreclosed home sales and pre-foreclosure sales often knows about foreclosure listings before others. If you need help finding an agent or you want to look at your local real estate listings, go to Reply!

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