Pre-Foreclosure Listings Mean Properties With the Best Bargains

By Kevin Simpson
Pre-foreclosure listings show properties available for distress sale in any location. The foreclosure process is governed by the foreclosure laws of the State concerned. Mortgage lenders are entitled to take action on the defaulted borrowers of home loans to get back their money. Broadly the foreclosure process can be classified into three stages - pre-foreclosure stage; actual foreclosure public auction; and repossession by mortgage lenders in the event of no bidders making the minimum bid at the time of foreclosure public auction.

When the borrowers of mortgage loans fail to meet their repayment commitments continuously for more than 3 monthly installments, the first step taken by the mortgage lenders is to send a Notice of Default. This will contain details of the loan amount balance outstanding in the borrower's account and require the borrower to make payment of the defaulted installments. This Notice of Default is to be recorded in the Recorders' office in case of a Trustee Sale foreclosure public auction or in the County Court in case of a Court proceeding, prior to Sheriff Sale. The name of the notice in that case is Lis Pendens - meaning Notice of pending law suit against the borrower.

The period between the Notice of Default or Lis Pendens and the actual sale of the property through public auction is known as "Pre-foreclosure" stage. During this period the defaulted home owner has the options of settling the dues to the mortgage lender either from their own resources or by selling the property to a buyer on their own, to meet the demands of the mortgage lender.

It is here home buyers have a most profitable opportunity to buy foreclosure properties, with discounts not less than 20 to 40% below the fair value of the property. The distressed home owners will be motivated sellers at this crucial juncture. If they allow the foreclosure on their property, not only they lose the property (which they are not in a position to save any way), but also get a bad remark on their credit history, to affect them adversely in all their future financial dealings.

Home buyers interested in buying properties from pre-foreclosure listings have many advantages. First they have time to search for the clearance of title of the selected property from the pre-foreclosure listings and establish there are no encumbrances over the property like second mortgage; tax liens attachments or other debts to cause headaches after buying, later on.

They can drive by the said property for a personal inspection to satisfy that the details provided in the pre-foreclosure listings are correct. Make a casual and friendly visit to the distressed home owner (as also some talkative neighbors) to ascertain first-hand the negative points, if any, in buying the said property. They can reassure the owners that they are interested in buying the property outright from them and show they have sound financial background to do so. This will go a long way in capitalizing in on the confidence gained and end up with a smooth and cordial negotiation of the sale deal with best bargains possible.

 

 

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