Purchasing a Pre Foreclosure Listing: Who Benefits and Why
The term foreclosure refers to the situation in which a homeowner defaults on their home loan or mortgage. The process of foreclosure varies from state to state, so it is important that you understand the process in the state where you are living. Generally, when a borrower defaults on a loan, the home itself defaults back to the keeper of the loan, be it a bank or a mortgage company.
Regardless of the process, purchasing a pre-foreclosure listing can be a benefit to every party involved. Read below for who benefits, why they benefit and for special concerns that you will want to consider before buying a pre-foreclosure listing.
Benefits for the Buyer
The greatest benefit for the buyer when he or she purchases a pre-foreclosure listing is negotiability. Home sellers that are in danger of entering foreclosure are in a state of duress in that they want to get the home sold as soon as possible in order avoid foreclosure. The seller will often be more negotiable on price if they know that they have to sell.
Benefits for the Seller
The seller also has much to gain when a buyer purchases their pre-foreclosure listing. The main benefit for the seller is that he or she can often avoid foreclosure by selling the house, which will help keep their credit and financial health in check. In addition to this practical aspect, when a pre-foreclosure listing is bought, it saves the seller in stress and worry as well.
Benefits for the Lender
Believe it or not, banks, mortgage companies and other lenders do not enjoy foreclosing on properties. Most of the time, the foreclosure process takes time, paper, the energy of their employees and a whole lot of money! These properties are more often than not listed with a real estate company, thus there are commissions to pay. There is the cost of general upkeep, such as keeping the grass cut.
Buyer Beware!
As with the purchase of any home, it is important for the buyer to know what they are getting into when purchasing a pre-foreclosure listing. Remember that the seller is under a great amount of pressure and may even be desperate to sell their home. In addition, people who cannot afford to make a house payment are often struggling in other financial areas as well. This may mean that the seller may not be able to negotiate items such as repairs, which may make or break the deal.
