| Homes become pre foreclosures when their mortgage loans default, this usually happens after the owners have missed several months of mortgage payments. Once the lender files a notice of default, the owner has a period of time, called a reinstatement period, to make good on the loan and get back on track. If, after this reinstatement period, the homeowner still has not paid up, foreclosure and the sale of the property follow. Homes and properties can be purchased during any stage of the foreclosure process. However, many feel that the most lucrative opportunity for real estate investors as well as homebuyers is the purchase of pre foreclosures. There are some real estate investors who only deal in pre foreclosures. There are several major benefits to the owners who sell their houses while they are in pre foreclosures. The owners have a chance to sell their homes and avoid default and having a foreclosure on their credit report. This will allow them the option of making a fresh start, free of any skeletons that might haunt them in their next home purchase. Furthermore, by selling during the pre foreclosures stage, the homeowners may even have a chance to walk away from the sale with a modest profit, especially if they strike a short sale deal.
Real estate investors will also benefit from purchasing pre foreclosures. Short sales of pre-foreclosures will allow the investor to purchase homes at discounted rates from the lending organization. The lender institution which won't want to be saddled with real property as a liability will be more than happy to negotiate some type of deal, and they will often settle for far less money than they are actually owed. Foreclosure real estate investing is a great money making method that involves only a moderate level of risk and purchasing pre foreclosures is a very powerful investing strategy, but it is often underutilized.
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