With foreclosure rate going down and new investors coming in the market, it is getting difficult to find attractive investment properties on MLS. Having realized that I am trying to learn and understand opportunities to invest in pre-foreclosures. After some research, I found couple of properties which are in pre-foreclosure stage. These properties are in the same building where I already own couple of units so I know the area, valuations and I feel more comfortable, if I need to talk to the owner. However, since I have never done pre-foreclosures before, I have no idea about the next steps. Here are some specific info about the property and questions I struggle with.
As per Zillow, unpaid balance is $88K.
I am assuming he wouldn't have paid HOA for few months or may be longer
Fair market value of the property (ARV) is around $65K
This property is scheduled to be sold at Sheriff Sale/Foreclosure auction in Jan. 2015
- -How exactly ‘pre-foreclosure’ works? What are my next steps?
- -If I knock on the door, what should be my talking points? Is there anything I need to do before I go there?
Will appreciate any advice and help to make this deal. Would be more than happy to team-up with a local and experienced agent/investor, if interested.
@Kumar Paj There are only a few options.
1. Buy the property for enough that it pays off the mortgage. Probably you'd be paying too much. 2. Pursue a short sale. This is when the bank allows the owner to sell the property for less that what is owed. In NY we have to involve a realtor. I'm not sure how it works in IL. 3. Buy it at auction. You'll need to have cash.
Most short sales do not work out so don't get too excited about this. But if you want to pursue it, find someone, either another investor or a realtor who can help you.
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