Buying a house in foreclosure is a way to purchase real estate at a meaningful discount - if you're able to accept some risk and willing to put down a significant amount of cash at closing.

At times, individuals are able to buy pre-foreclosed houses at very attractive prices. I am currently assisting a homebuyer close a "short sale" / "pre-foreclosure" for a price around 15% under "market value." It's a great deal.

We were able to create a win-win-win betwen the seller, the current mortgage provider and my buyer. The seller needs to sell and has a desire to avoid foreclosure. The bank knows that they will not get full price if they sell the home now and they don't want to go through the foreclosure process. My buyer is willing to put down a meaningful down payment, use the same mortgage provider (so the bank can recoup some expenses) and move quickly.

For buyers, it's often easier to work pre-foreclosure homes that are non-MLS (typically sourced through a Realtor who has contacts in the area or a personal relationship) and have one of your team members (your Realtor, your banker or other service professional) have a pre-existing relationship with someone on the other side. It helps the transaction progress more efficiently.

If you're looking to buy a home that is in foreclosure or pre-foreclosure, there are a few things to keep in mind.

When looking for a home that is pre-foreclosure, you need to make sure that you have the capital to move quickly. This can be done simply by having the cash available or by having the proper pre-qualified financing.

Typically, the seller and their banker are looking to move as fast as possible. An opportunity to make a cash offer or close within 15-30 days is a significant benefit (especially if you're not the highest priced offer).

There are a number of ways to find out which properties are in pre-foreclosure or are likely for a "short sale."

A local, experienced Realtor can provide you with market insights and pitfalls.

You can also find target buys through public records. If a home is in default, this becomes public record - the local courthouse will have documentation about what homes are in pre-foreclosure. The Internet has also made listings of homes in default very accessible. You can simply search "foreclosure listings" or you can contact actual foreclosure companies. These companies will often have a cost associated with the service.

When a property has entered post-foreclosure, the property has already gone to the lending company. Many times these companies cannot sell the home at auction and so, they will list the property with a real estate agent.

They then become "Real Estate Owned" (REO) property. If buying a "Real Estate Owned" property, it may cost you a little more than if the house were to be bought at auction. However, buyers will have more access to these properties and the buying process will go much more smoothly.

This is not to say that "Real Estate Owned" property is going to be extremely pricey, either. These homes are generally still sold for less than they would be if the homeowner had simply placed them on the market. This is because the lending companies don't want to spend a lot of time selling the property, and they also don't want to pay the expense of owning the property. And so, they will sell it for a fairly cheap price.

More info on your stop foreclosure information search:

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