Ed Combs

Preforeclosures can generate a good return for investor

Preforeclosures by definition exist when a homeowner gets behind on their payments and is notified by their bank they are in default; this is much different from a Foreclosure .

Preforeclosures are complex real estate transactions and require a great deal of work but can generate a sizeable return if done properly. Buying a property in preforeclosure involves approaching the borrower/owner and offering to buy the property outright.

The borrower/homeowner will end up with something to show for any equity in the property and avoid a bad mark on his or her credit history, which is advantageous.

- A preforeclosure is essentially a grace period that allows the homeowner to address or cure the default within a period of time that is defined by the mortgage contract with the bank.

- The length of time for a preforeclosure can vary but it is typically 60 to90 days in the state of Georgia as a general rule.

- If there is sufficient equity in the property there is the potential to generate a profit as an investor and for all parties (homeowner, bank and investor) to work out a deal.

- You are actually buying the equity in the property, working out an arrangement with the homeowner and the lender; then selling the property to generate a return.

- You need to research the title and condition of the property and can realize discounts of 20-40 percent below market value on average.

Prefloreclosures Guidelines

- Locate loans in default

- Evaluate the available preforeclosures opportunities for investing

- Contac the preforeclosure homeowner

- Inspect the Property and all Loan Documents

- Assess the Homeowner's Needs and Desires

- Determine the Selling Price and ROI for a specific preforeclosure

- Negotiate with the Lender, Owner and any Lien Holders

- Finalize the Contract and make any repairs on the preforeclosure