You may have been one of those lucky enough not to get caught in the recent collapse of the US housing market bubble, but hundreds of thousands, if not millions, of home owners were not. There are currently thousands of homes in pre-foreclosure or foreclosure in all fifty states and you may be able to buy a real estate foreclosure at a significant discount to its most recent selling price. But most often, your savings will be somewhat smaller.

When you buy a real estate foreclosure, you will be purchasing it not from its distressed owner, but from the lender who has already retaken title to it. The previous owner had opportunities during the foreclosure process to cure any default on the mortgage, so if you hesitate to buy a real estate foreclosure because you empathize with the owner, the owner has already moved on.

Why The Lender Wants To Sell

The lender who has reacquired the property will be a motivated seller, simply because they are not earning any income on it as they did when there were monthly mortgage payments being made, and they do not want the costs of insuring it and paying the property taxes to add to what they have already lost.

If you are qualified to buy a real estate foreclosure, you may not only get it at a discounted price--you can usually expect a 5 to10% discount--but you may also find the lender willing either to give you very favorable terms on the mortgage rates or closing costs, or to lower the down payment.

Preparing To Buy A Real Estate Foreclosure

If you are serious about learning how to buy a real estate foreclosure, you will need to spend considerable time in research to learn how to know when a property has entered the pre-foreclosure state, and be ready with the funds to purchase a property when it goes to auction. You should always view a foreclosed property in person, or have a realtor do it

for you, before attempting to buy a real estate foreclosure.

If a property's previous owner lacked the funds for the mortgage payments, the chances that there were not funds to maintain the property are high. There is little point to getting a nice discount when you buy a real estate foreclosure, only to have to give it all back and more in repair costs to make the property inhabitable.

Buying a Pre-Foreclosure

If you learn how to find properties in pre-foreclosure and have the heart for it, you may contact the property owner directly and attempt to buy a real estate foreclosure as a private deal. Granted that the owner may be under significant financial stress and not the most co-operative of bargaining partners. But if you are willing to offer a fair price for the property, you will be giving that owner a golden opportunity to save his or her credit record, and have a much better chance of getting a loan on a new property.

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