If you browse for homes on other real estate websites, you might occasionally see a home being marketed as a “Pre-Foreclosure.” Here’s what you need to know:
1. Pre-Foreclosure homes are not technically for sale….at least, not yet. When a homeowner is more than 90 days late on his or her mortgage payment, they are issued a “Notice of Default”, the foreclosure process begins, and the home is listed on some websites as a pre-foreclosure. However, the owner still has a chance to pay their debt and stop the foreclosure process before the home goes to auction.
2. They can be a bargain – but they’re not for everyone. In fact, homes in the pre-foreclosure stage are considered the trickiest to purchase according to industry experts. Until the home goes to auction (usually not for at least a few months or even a year) the only way to buy it is through the homeowner — not an easy thing to do with an understandably distressed seller, especially when the home is typically not technically up for sale.
3. It’s hard to know what you’re really buying. It may come as no surprise that most people who buy homes during the pre-foreclosure period (or at auction) are professionals with experience in construction. Often times, buyers won’t have a chance to walk around inside the home – let alone get it inspected! It’s a risky process, and we recommend that buyers prepare themselves for extensive renovations.