Pre Foreclosure

Written by Linda Alexander
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Pre Foreclosure refers to buying a property before the sale. Often, homeowners welcome the chance to work with someone who will rescue their property, If there is enough equity, you as an investor might be able to work out an arrangement with the lender and the homeowner, maintaining the value of the property, then selling it for a profit.

The Lis Pendens is the first public notice that announces the loan is in default. When investing in a pre foreclosure, this is the place you should begin. You can find Lis Pendeds in a newspaper's legal notice section, or at the county courthouse.

Profiting from a Pre Foreclosure

Next, get an estimate of the property's market value. You can do this on your own, or have your real estate agent do it for you. Then, subtract the default amount from the estimated market value in order to determine the gross equity in the property--your profit potential. If there is a big difference leftover, you might be able to make a good profit. If not, keep searching for properties.

You must also get in touch with the homeowner, which may be difficult. If they are open to it, visit the property and assess its condition. If you are going to make an offer on the property, you must have the loan, ownership, and debt information. If they are not interested, don't be pushy-and certainly don't trespass on their property. Simply keep searching for more pre foreclosures until you find the right opportunity.

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