Can you buy preforclosure homes

8 Replies

Just think of the bank's perspective: they are in the business of generating loans and borrowing money short term (deposits) and lending out long term and collecting the spread. They are not in the business of selling real estate. Any money and time you can save them by bidding on a pre-foreclosure property will be worth it for you and them if the price is right. It is worth it to at least try. 

Originally posted by @Kellee Fulmer :

Can you buy pre-foreclosure homes before the auction date? Wondering if it’s worth asking distressed owner to buy their property... located in California

You can buy a pre-foreclosure before the sale if there's enough equity to allow a full payoff to the lender. Do this as any normal real estate transaction.

If it's underwater, the seller needs to get permission to do a short sale. The lender will most likely require that the seller list his home on the MLS in an attempt to get full market value. You'll have to compete with all the other buyers out there to get the house. The seller will need to do this with plenty of time before the sale as dual tracking is prohibited in CA.

If you are asking that basic of a question, i would highly recommend that you do a lot more research before putting your feet into the deep end of the water. What you are proposing/asking, may subject you to license/registration as a foreclosure consultant, which if you don't do, and/or you violate the rules, could subject you to civil penalties, if not worse. 

Yes, you can buy a preforeclosure. As far as you are concerned, and as Andy points out, it's like any other open market transaction where the only difference is, time is not on your side so, you have to close before foreclosure. The lender is not required to stall foreclosure proceedings while the homeowner is looking for a buyer.

Originally posted by @Andy Mirza :
Originally posted by @Kellee Fulmer:

Can you buy pre-foreclosure homes before the auction date? Wondering if it’s worth asking distressed owner to buy their property... located in California

You can buy a pre-foreclosure before the sale if there's enough equity to allow a full payoff to the lender. Do this as any normal real estate transaction.

If it's underwater, the seller needs to get permission to do a short sale. The lender will most likely require that the seller list his home on the MLS in an attempt to get full market value. You'll have to compete with all the other buyers out there to get the house. The seller will need to do this with plenty of time before the sale as dual tracking is prohibited in CA.

Also in CA OR and WA  there are are laws with a lot of teeth in them on how you may deal with distressed borrowers.. its not like the folks in TExas who are chiming in here..  I would bone up on these regulations..  there was a ton of fraud in foreclosure rescue and these state enacted these laws back in 07 ish to 08..  

Welcome to BiggerPockets! You need to understand what you are getting into because these situations can be pretty sensitive. If you get in contact with a pre-foreclosure owner, promise them to get their property off their hands and then not follow through with that promise, you would be putting quite a sizeable dent in their credit. Do proper research before dealing with both foreclosures and pre-foreclosures, before deciding to pursue a deal. Laws on unlicensed wholesaling is also something you might want to look into, assuming that is the route you plan on taking.

Good Luck!