Pre foreclosure can be defined a stage while the homeowner has fallen short of repaying debt on the property but still own it. During this time, the lender/s might have filed a lis pendens on the property to foreclose it through judicial process. During this period, the homeowner can take effective steps to stop foreclosure and auction. However, for many homeowners, selling the home during this stage appears as a viable option as during foreclosure auction their interest is paid least importance. In this write up, we will discuss about the causes behind increase in sales of houses at this stage, advantages a buyer gets by buying them and certain notes of caution.
Why Pre-foreclosure sales are increasing?
The factors to be blamed for the rise in this growth are global economic recession and the ongoing credit crunch. The devastating effects of global recession like pink slips, zero increment and squeezed hiring have created turmoil in the job market. The wave of this recession is beyond anticipation. Hence, people who have taken home equity loans are now in a helpless condition. These are long term loans and while taking them, people were not aware about the dynamics of recession. Unavailability of easy credit is also contributing a lot in making people unable to maintain regularity in repayment. The only way left for them is selling the home, repaying the lender’s money and moving to a rental or low cost accommodation.
What are advantages of buying homes before foreclosure?
For buyers, these deals offer manifold advantages. Here, buyers have the optimum flexibility to bargain as the seller is in a vulnerable financial situation. Studies reveal that sale at this period is at least 15% cheaper than the market price of the property. Unlike foreclosure auction, you are free to inspect the home at this stage and persuade the owner to make necessary renovations. You can move to the property as soon as the owner vacates it.
Precautions to be taken while buying properties at pre foreclosure stage
You need to make sure that the property is free from litigations. An idea about the lien holders and existing debt burden on the property will help a lot in this regard. You need to convince the owner to make all tax and insurance premium dues on the property to be cleared. You are advised to involve an attorney with every phase of buying pre foreclosure property.
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