While there is little doubt that recent economic conditions have greatly increased the number of homes that are for sale through foreclosure, there are also a growing number of homes that are also in pre foreclosure. Homes in this situation will either be moved into a full foreclosure situation, or will be refinanced by the owner, or may be sold prior to foreclosure.
Since in foreclosure the homes are typically auctioned, finding pre foreclosure homes may provide potential buyers and investors a better chance at buying the property without having to risk what prices may end up at a public auction.
While it may not be feasible to keep in touch with all the different courts in the state to find out about the properties listed as pre foreclosure homes, using a pre foreclosure service or a real estate agent that will monitor new homes on the listing within the areas they service is often a great idea. The real estate agent can also inspect the property, at least drive by and take a look at the general appearance, before contacting you as the potential buyer.
There are some pre foreclosure homes that may already be vacated while others will be occupied. Typically in most pre foreclosure homes the owners will be attempting to resolve the default payments with the lender, however some may also be very willing to sell out and take a small loss to avoid having a foreclosure on their credit record. In this case it may be well worth your while to talk to the homeowner to try to negotiate a fair price before the foreclosure goes through.
There are also companies that purchase pre foreclosure homes in large numbers. Usually these companies use a variety of options to find the homes including mail outs to large areas, internet advertisements, phone calls to home owners as well as actually making appointments to talk with the home owner. Often these companies will buy pre foreclosure homes at reduced market value and then either sell the house as is or upgrade the interior and possibly the exterior and then put the house on the market at a much higher price.
Individual buyers looking for pre foreclosure homes will be in direct competition with these larger home purchasing companies, however they also may be able to offer a higher price for the home than the company can or will. It is critical for a first time home buyer to understand all their options and expenses when buying a home in pre foreclosure.
There can be literally thousands of dollars in additional costs over and above the agreed upon sales price, so working through a real estate agent or real estate attorney that is very familiar with pre foreclosures is highly recommended.