Pre-foreclosure. What are the steps in purchasing these at a bargain?

Asked by Grace, 90630 Sun Oct 26, 2008

After searching through RealtyTrac, I have found a property that I am interested in. The property is being considered as a pre-foreclosure. I was wondering what are the inital steps I must take in purchasing these kinds of homes. The house is not on the market currently and I would like to target it before it does hit the market. Many of the realtors in my area do not seem to like pre-foreclosure or foreclosure transactions and do not seem knowledgable in this area. Is contacting the seller the best way? I would like to approach the seller and would like to know the best ways in a pre-foreclosure transaction.
Thank you in advanced.

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Jill Ford, Agent, Southern Pines, NC
Mon Oct 27, 2008
Grace, I had a long, well thought out answer to your question and went to look at community guidelines link above and returned to find my answer gone.

I'll try again--if what you are hoping to accomplish is a short sale, having an experienced professional on your side may be essential. Not to say that you can't get it done, but the short sale process can be a minefield for someone with no experience at it. First and foremost is that the seller has to have faced the reality of being upside down in their house. Their best case scenario may be walking with dented credit and no cash, rather than trashed credit and no cash. If they haven't "gotten religion" on that issue, you are facing an uphill battle and a real estate professional with experience in this arena can be extremely valuable.

In order to do a short sale, the banks will require a complete short sale package, which involves financial and personal info from the seller, so his/her cooperation and emotional buy-in is essential to the process.
email me if you want a list of what's involved:

I would suggest using local print (newspapers, real estate book, etc) ads to locate a Realtor who does deal with short sales. A broker who has homes advertised as short sale candidates is likely to have some experience in them. I would not use the internet for this particular search, as "short people" (check this post for one broker's experience with and warning about what he calls "short people" )
will turn up and are to be avoided! Don't hire a broker that uses them either!

A couple of warnings--be prepared to be very patient--whether you go it alone or hire a buyer's agent.
Short sales are rarely good opportunities for anyone on a tight time frame, that needs to be into a house on a deadline. The Loss Mitigation folks at the bank involved won't consider a short sale without a COMPLETE package and then their first step is going to be to get an appraisal or BPOs (broker's price opinion) from local agents. It is likely you won't hear from them before this is complete. Inexplicably, this can take weeks, or in some cases longer. Patience is not just a virtue in short sales, it is a necessity.

Another suggestion--Realty Trak is reasonably reliable but they don't always have the most up to date info. The property owner you have identified may have already sold his/her home, or may have come up with a solution such as a refi or other financial workout to satisfy the lender, or may have filed bankruptcy protecting their home in the process. If your county has their land records on line, learn to use them.

Good luck,
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Stew Keene, Agent, Scottsdale, AZ
Mon Oct 27, 2008

Here's what you do.

Go find a real estate attorney to represent you.

Then, go knock on the door, introduce yourself to the owner and tell him you want to buy his/her home.

You, the owner and your attorney can work things out with the bank and the owner.

Remember that you will probably pay more for the home than if you just let it go to foreclosure.

I'm sorry to hear that you don't have any Realtors in Cypres willing to help you.

Good Luck,

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