Boy there certainly is a lot of interest in investing in foreclosures. Probably spurred on by the media as well as the sheer volume of properties in distress. This article will show you why the preforeclosure stage may be the best time to buy.

For those that are not clear on the difference between foreclosure and preforeclosure a definition is probably in order. The difference basically comes down to timing in foreclosure process. There are four distinct time periods: (1) Preforeclosure - the period before the notice of default is filed (2) the period after the notice of default is filed (3) the foreclosure sale itself (4) after the sale when the property belongs to the bank-REO. The advantages to buying in the preforeclosure stage over the foreclosure auction are numerous.

You will have the chance to inspect the property, unlike when you buy at the auction. This is a huge plus because you will know how much to budget for fix up. There is no guessing or nasty surprises.

The foreclosure auction requires that you have the funds on hand at the auction. No funds, no bidding! Takes a lot of capital to go the auction route.

You don't have the opportunity to use the benefits of leverage at the auction sale. In preforeclosure you can line up financing and often the current lender may agree to giving you financing.

Title insurance is more difficult to obtain because title insurance companies are taking a leap of faith that the procedures of the foreclosure were carried out correctly according to state laws. So they are hesitant to provide the title insurance on a property purchased at auction.

When you buy at the foreclosure auction you don't know what type of people you will have to deal with that may be living in the property. They could be downright hostile and even dangerous. In preforeclosure you will have worked directly with the owners so you know what to expect.

Property insurance may be difficult or even impossible to obtain. Insurers are selective about what they will insure and they will run checks to see if the property has ever had a claim filed against it. You can verify that the property is insurable in a preforclosure situation.

In auction purchases, terms are not negotiable and they are final. With preforeclosure you have some flexibility with the terms and if the deal can't be put together as a win-win for everyone then you can walk away.

You have the added bonus of being able to help the owners save their credit from further damage resulting from a foreclosure when you buy preforeclosure.

These are just some of the more important reasons you may want to avoid the foreclosure auction and look at preforeclosure investing.

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