- Preforeclosures are cheaper that regular foreclosure properties.
- During the preforeclosure period, you can visit and examine the property. At a foreclosure auction, this isn't possible.
- With a preforeclosure, you deal directly with the owner/seller, soon after they've received a foreclosure notice from the lender, city or state.
- Negotiating with a seller is easier and less competitive than bidding against professionals at a foreclosure auction, and it's simpler than dealing with a lender.
- Owners wanting to sell a home during preforeclosure are motivated to sell.
- You or your client can rent the home to the owner after taking it over and sell the house back to the owner or to another buyer for a profit at a later date.
- You don't need to pay huge amounts of cash upfront like at an auction.
- Call your city recorder’s or clerk’s office to learn which agency handles foreclosures. Foreclosure data from lenders is freely available public data.
- Contact the agency and ask to be put on their free information list.
- Read the information on foreclosure procedures for your area. Public records may include a Notice of Default (NOD) from a lender, telling the owner the house will go to auction if payments aren't made. This is when the preforeclosure period begins.
- Get to know the preforeclosure period and how long the owner has before he or she must sell. Owners are more motivated to sell cheaply during preforeclosure.
- Get to know the "redemption period"--the time the home owner has to buy back the home after it goes to a foreclosure sale. Look for the shortest redemption time possible. Some areas have zero redemption time; others as long as a year.
- Before you or your client makes an offer on a preforeclosure property, be sure to inspect it and have a competent real estate attorney review the offer.
- Consider using a sale-leaseback deal to allow the seller to remain in the house. An attorney can write it for you. With a sale-leaseback, you or your client owns the property and receive regular rent payments from the seller.
Check out HUD Homes at www.hudhomestore.com. Other sources include the real estate listing services and websites like zillow.com, trulia.com, homesearch.com, realtytrac.com, and realtystore.com. Also be sure to check your area's business and real estate journals and magazines.
Real Estate Books and Self-Study Courses from International Wealth Success, Inc.