What are the differences and Pros vs. Cons of trying to purchase?

Question

Foreclosure Residential Properties vs. PRE-foreclosed properties? Is there an advantage to do one over the other?

Answer 1

.   Both have lots of pitfalls.  Pre-foreclosure you are dealing with a house that has a mortgage of $300,000 and is worth $200,000.  That's why it is in foreclosure.  The bank will not be happy about losing $100,000 so they try to get the current owner to split the loss with them.  Not one owner in 10,000 agrees to this. So you waste a lot of time waiting for them.

Foreclosures are easier to close the sale.  But they need repairs and your lender will require that the repairs are done before you buy the house.  If you ask the seller to do repairs, they laugh. It's a repo.  They don't do repairs.  If you offer to go in and do the repairs, you will not be allowed. If you break your arm, the bank knows what will happen.  So you reach a deadend.  This really is for someone who has cash and can pay cash and avoid a loan.

Answer 2

Foreclosure properties tend to be held by auction. Preforeclosure are listed with an agency, in an attempt to sell prior to court action.

Most foreclosures are sold as is. If you discover a major structural issue after your deposit is accepted, its too bad. And remember, many homes that have been foreclosed upon, dont have a great history of owners making repairs. (If you cant pay the mortgage, are you going to replace the septic?)

both transactions require a ,lot of work, and expertise. If you are looking to get rich quick, forget it.

Answer 3

Pre-foreclosures are usually short sales, and they are really h**l to get closed.  

If you do not want to wait 3-4 months to determine if you bought it or not you shoudl stick to REO's.   Once the foreclosure is done the property is much easier to purchase, sometimes easier then a regular sale as you can close the escrow in a week with no one living there.