Buying a foreclosed property that is already bank owned is one of the easiest decisions to make. The prices are often below market, there are no truly complicated matters you will have to deal with as the original owner has already moved. However, there are many other stages of foreclosure that investors may be interested in, including approaching a homeowner to purchase the home before the foreclosure process is concluded. Lets have a look on how you can prepare this kind of home buying process.
The first thing you need to do is have a check at hand. Homes are unlike any other investment people make, as their is history and emotion tied to the it. However, if the current homeowners are in a desperate situation where they need to sell their home quickly and do not want to go into foreclosure – to protect their integrity as well as their credit, you may actually be doing them a favor by inquiring about purchasing their home.
By gingerly and tenderly approaching the homeowner in crisis before the foreclosure, you may actually be throwing them a lifeline that they desperately need. You may be the person that can help them get out from under the debt of their home and provide them with the cash they need to start rebuilding their life. In theory, you can actually be doing them a great favor as long as you handle the situation professionally, courteously and don’t force them into making a choice that they will regret later. Ultimately, a short-sale (a bank approved sale of a property on the verge of defaulting) may be helpful.
There are also foreclosure sales that go on against the will of the defaulted owner. If they did not agree to a short sale and the house goes into default, the court system may end up auctioning off the home to make up for the losses. If you win that bid, you may inherit a house filled with problems, including the owner who refuses to move. In that case you will need to legally evict them before you can even step foot in the house.
You need to personally assess a situation before determining whether or not to approaching homeowners before foreclosure sets in. But as the old expression goes “it does not hurt to ask.”
What would you do in a situation like this?