Pre-foreclosure sales allow the mortgagor in default to dispose of the property and, also, to use proceeds from the sale to pay off the mortgage debt, even if the proceeds may be less than the outstanding amount.

Often, it is best to buy pre-foreclosure properties from private homeowners as it allows the owner to get out from the mortgage without spoiling his or her credit rating and you, the buyer, may get below-the-market prices on the home.

It is important that you find up-to-date pre-foreclosure information and, then, act quickly. There are plenty of pre-foreclosure listings available. In addition, you need to check out several properties at the same time. It is highly probable that other people will be interested in the same home and may be able to offer a better deal.

To help you stay organized, create a system for keeping track of the many properties of interest to you. This can be as simple as a small notebook or an Excel document. Each time you find a home that interests you, note the address, location, owner’s name and telephone number, lender, title company and observations about the property. Also, keep record of any contact you have with the present owner.

Once you locate a property in pre-foreclosure, it makes sense to physically inspect the condition as well as check out the neighborhood and get a feel of how it is perceived by neighbors. As you draw nearer to closing a deal, you will want to hire a professional inspector. It does you no good to save a lot of money on the purchase of a house only to have to invest thousands in unforeseen repairs.

On a property entering pre-foreclosure, an owner has a couple of months in which to reinstate the property by paying up the outstanding amounts. Such a reinstatement prevents the foreclosure process; so, it makes sense to check whether the foreclosure property is reinstated or not, and this may be accomplished through a call to the trustee or attorney in charge of the foreclosure.

When approaching a homeowner who is being foreclosed on, remain humble and sensitive to the difficult time he or she is going through. Arrogance can only infuriate and cause them not to want to do business with you. Make them aware that you sincerly want to help them.

Pre-foreclosures are ideal for those wishing to buy a low cost home. It is really a win-win-win situation. The homeowner facing foreclosure is freed from his debt, the lender avoids a big expenses and a significant loss and you get a house at price well below the market.