Can you purchase from an owner while in pre-foreclosure

Question

Am I able to purchase a home from an owner while it is in pre-foreclosure or is it already too late at that point. If not how would I go about it.

Doug Gilmer · Answer

@Sean M Tomak ABSOLUTELY!.... This is the perfect reason to learn Creative Finance Options!.... Subject To is one of the best ways for this example.  Check out the King of Subject To on YouTube, Pace Morby!

Aaron Norris · Answer

I'll add, as I didn't notice any comments on this idea so far in the thread, you can also consider the option of a "subject to" agreement.  Buying subject-to means buying a home subject-to the existing mortgage. It means that the seller is not paying off the existing mortgage. Instead, the buyer is taking over the payments. The unpaid balance of the existing mortgage is then calculated as part of the buyer's purchase price.

A legal contract will be very important to mitigate risk because you are essentially paying off that person's debt with their name remaining on the loan and a transfer of title would be needed to you as the buyer, paying off the remaining balance of the seller's loan, but if the process is navigated successfully, it can be a great way to wholesale a property, at a minimum, yielding a high profit.

Take caution, though, I'm still new to real estate investing so maybe the pros here can help clarify any mistakes. :)

Chad U. · Answer

True but most lenders will not accept an unsolicited short sale offer if the property is not listed for sale to the general public first, myself included.

Minna Reid · Answer

Yes you have to buy from the owner if its in pre-foreclosure. They still own it. THEY DO NOT HAVE TO BE CURRENT OR GET CURRENT TO SELL. You just have to buy the house before it forecloses.

Jonathan Greene · Answer

Everyone else nailed this one so obviously, you can, but where are you getting your preforeclosure info from and is it verified? Preforeclosure lists and public-facing notations on sites like Zillow are wrong most of the time because they mark everything preforeclosure when a lis pendens is filed and don't remove it when it's taken care of the customer catches up. If you haven't dealt with these sellers, the key to understand is that they do not want to admit they are behind because it's usually early in the process. I always say I got a list, but I know they aren't always right just so they don't start defensive.

Maurice George · Answer

Yes. Of course you can. In my state, you can even buy the property until judge confirm the Sheriff's sale.

Minna Reid · Answer

@Chad U. True - the property must be listed, but the seller can still sell to whomever they choose.

Minna Reid · Answer

@Chad U. The seller could also sell the property in a short sale if the proceeds can’t make the pay off.

Chad U. · Answer

Yes, As long as your offer price is more than the mortgage payoff which includes the principal balance, accumulated interest, late charges, escrow and corp advances plus any legal fees that may have been incurred.

Benjamin Aaker · Answer

You can. The homeowner has to become current on payments. The preforeclosure period is designed to get a homeowner back on track with payments. The bank is probably trying hard to restructure the mortgage. Now is a great time for you to start talking to the homeowner about purchasing from him/her. You might be able to solve their pain-point (not being able to make payments).

Can you purchase from an owner while in pre-foreclosure

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