What is a Pre-Foreclosure?

With the crash of our Real Estate market and meltdown of our current economic system, savvy investors are taking advantage of the huge surplus of homes that are being foreclosed on. Their are basically three stages of foreclosure homes available for you to try to make deals on.

One of the most widely known types or ways of buying foreclosures are at the courthouse auctions. These used to be where you could find very good deals, but not so much today. With the Internet the information has become easier to research, so many more people show up to the auctions than they used to when you actually had to go down to the courthouse or even just read the newspaper to search for the homes in foreclosure. Also most of the homes or homeowners rather at these courthouse auctions are upside down on their loans, making it a terrible and loosing deal.

I have just recently blogged about REO properties and their advantages, but today I wanted to write about pre-foreclosures. A pre-foreclosure is where the tenants still reside in the home and are in the process of being foreclosed on. Many people don't like to deal with these types of Real Estate deals because of the complexity and the fact that real people are dealing with financial hardships and are facing loosing their homes.

So, how can you make money with pre-foreclosures? By trying to do what is known as a short-sale with the bank. You can help the tenants from being foreclosed on an having it on their record and you can end up with a very good deal, walking into a property with thousands of dollars in equity. A short-sale is where you offer the bank less than what is owed on the loan. The banks are willing to work with investors who do this because it will prevent them from having to buy the house back at the auction and then having it added to their already huge inventory of REO (bank owned) homes.

A short sale can be complicated and there are many steps involved which include working together with the current homeowner. There are several book are guides that explain how to do this successfully. I have reviewed many of them and one that I like best is found by Clicking Here.

Of course their are many other sources of information of short sales and pre foreclosures out there, but in the end it is up to you to take action and make the right moves that will make you money. Now is the best time ever if you are thinking of buying Real Estate as long as you can afford to hold on to it and carry the expenses until the market turns around.

I wish you the best of luck and don't forget to visit my home page and pick up my free foreclosure report "7 Shocking Mistakes Amateurs Make When Trying To Buy Foreclosures". Happy house hunting.

Scott
http://www.homeforeclosurelist.net

Bank Home Foreclosures REO

Bank home foreclosures or "bank owned properties" are normally refereed to as R.E.O. or Real Estate Owned. Right now banks have record high REO properties with no end in sight. A house or property becomes bank owned after it has gone to auction and not been purchased by another buyer so the bank had to buy it (pay lawyer fees, back taxes, etc...) and keep the property.

The reason why so many homes are not being purchased at foreclosure auctions, such as court house auctions, is because the majority of houses being foreclosed on today are upside down loans. In other words, more is owed on the mortgage than the property is worth. About 5 years ago you could actually find a lot of good deals at courthouse foreclosure auctions, but today your best bed for a good deal is buying a R.E.O. property.

Most banks have at least one Real Estate agent that handles their R.E.O properties for them. What you want to do is get to know an agent who deals in strictly or mostly REO properties. Most of these agents will work for several different banks and turn you on to other deals that you may not have found out about.

Today, with the great information available on the Internet, you can find many of the big bank REO properties. Each major bank currently has real estate owned department to deal with the huge inventory of foreclosed houses on their books. The banks hate these properties because they are in the money business, not the Real Estate business. They have already lost a lot of money on the property and as time goes on, they will continue to loose more and more money. They get penalized for having to many bad loans and REO properties on their books.

The longer a property has been on the market, the more desperate a bank is to get it off their hands, which can lead to a great deal for you. Be careful and do your due diligence of course, because a property may have been on the market for a long time because it has a lot of problems, but do not let this stop you. You may be able to offer a very low price which will allow you to cover the repair expenses and still sell at a profit (when the market is right to sell of course).

You can also attempt to do a short sale with the bank, but this is usually a lot lengthier process and a lot more work. You have to work with the current owner/resident and it can be a pain. With bank home foreclosures such as REO properties, the old owner/tenants are long gone and the home is ready for you to fix up.

Scott
http://www.homeforeclosurelist.net