Residents of California interested in real estate investments may want to learn what they can about investing in properties involved with the pre-foreclosure process. These investment opportunities are more prevalent at times when foreclosure rates are high.
Real estate law requires lenders to file a notice of default when the borrower is three or more months delinquent in their mortgage notes. This notice provides the borrower with a warning that legal action is forthcoming that will result in foreclosure. Investors are often able to move in and negotiate a deal with the delinquent borrower that allows them to purchase the home for quite a bit lower than market value.
When negotiating a deal for a home in pre-foreclosure, it is important to understand that a delinquent borrower will want to avoid the credit hit from a foreclosure. A sale that provides them with the money necessary to pay the lender is needed to do so. Investors should begin the negotiations with an eye both on the amount of money needed by the delinquent borrower and the market value of the home.
Homes that are part of the pre-foreclosure process are low-risk investments that often do not require much collateral to secure. These investments often provide an opportunity for investors to realize generous profits. Pre-foreclosed homes are usually found in decent shape without the need for expensive repairs before they are once again ready for the market.
Houses purchased in the weeks before a bank or other lender forecloses on them are often easier to sell than other homes. These homes have been occupied by families in most cases, which spares a property from the type of damage and neglect that will negatively affect a home’s livability. Move-in ready homes are at a premium in the real estate market, and this term describes many of the properties available for purchase as pre-foreclosures.
Investing in pre-foreclosed homes, like other types of real estate investments, involves some degree of knowledge regarding the real estate investment process. This process often includes paperwork, laws and procedures with which inexperienced investors are not familiar. A seasoned real estate attorney may represent individuals looking to complete the steps necessary to secure a real estate transaction.