These days, investors are poised like vultures in trees along the roadway, ready to dive on the next foreclosure hitting the market like roadkill on pavement (graphic I know, I get a little carried away sometimes). Anways, do your homework and there's no doubt you can find a heck of a deal investing in foreclosures but think one step ahead and you might get an even better deal by buying the property BEFORE it's foreclosed upon.
This method of acquirement is known as a short sale or pre-foreclosure. The term "short sale" simply means the bank is ready to unload it, so they might accept an offer of less than the property is worth. Many times the owners are eager to go this route as well, anything to keep a foreclosure off their credit record.
Banks are willing to listen to pre-foreclosure offers because, face it, they don't want to own this property. They're not in the real estate business. They're in the lending money business. How much of a discount might you expect? The answer varies but here is something to think about. Some estimates say it costs a bank about 18% to go through the foreclosure process. There are legal fees, court costs, inspections, appraisals, repairs, maintenance, and sales expenses. If you were to make an offer within that range (18% below appraised value) prior to the foreclosure process, you never know what they might say yes to.
Many times you can even arrange to lease the house back to the owner you just bought it from. They might not be too crazy about moving and this deal benefits everyone.
Something to think about.
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