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How do I buy a pre-foreclosure property?

Overview

When a property is in pre-foreclosure (NOD, LIS), the owner still has a chance to stop the foreclosure process by paying off what is owed or by selling the property. The pre-foreclosure period can last several months, so you may need to be patient when trying to contact the owner in default.

Contact Owner

After first calling the trustee listed on RealtyTrac and confirming the property is still in default, you should contact the owner and let them know of your interest in the property and try to arrange a meeting with the owner to discuss a possible sale and to get a better look at the property.

Most people send a letter to the mailing address on file. You could also search information to try to find the owner's phone number. Some people also approach the owner in person, which we do not recommend unless you are experienced doing that.

Calculate Offer

To determine how much you will pay the seller for the home, you should subtract all your costs as a buyer (loan balance, additional liens, repair costs) from the estimated market value of the property and use that number as a basis for your negotiations with the owner. If you reach an agreement with the owner, you will need to make sure you cure the loan that is in default and satisfy any other liens.

Keep in mind that a property in a pre-foreclosure status (NOD, LIS) is not necessarily for sale. The owner may be pursuing other options to cure the default; however, an offer from a pre-qualified cash buyer may be the best solution to get the owner out from under the impending foreclosure. You can also make an offer to the owner prior to the scheduled auction date even if the Notice of Trustee Sale (NTS, NFS) has already been filed.

Foreclosure is a legal process that allows a lender/bank to sell or take possession of a property due to non-payment of a loan that is secured by that property. RealtyTrac posts properties that have already been foreclosed (Bank Owned) and properties that are in the foreclosure process (Pre-Foreclosure, Auction). Besides buying pre-foreclosures, buyers have two other opportunities to purchase property during foreclosure.


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