It's unfortunate but foreclosed homes currently represent half of all of all the homes sold in the US. Before the bank forces foreclosure there is in a period called pre-foreclosure which can last anywhere from two to twelve weeks. Many of the real estate gurus have made a fortune on pre-foreclosures and consider it as one of the best, if not the best, way to invest in real estate.



Many houses that are 'for sale by owner' are houses that are in a period of pre-foreclosure. The lenders sometimes allow the homeowners to try to sell their home before foreclosing it. The banks are not in the real estate business themselves and would rather the owners sell the home instead of (the lenders) having to foreclose it.

Here are several reasons that real estate experts feel it's a better to purchase a home during the pre-foreclosure period instead of waiting to buy a foreclosed home at a government auction:

- Pre-foreclosed houses are often cheaper considering as it's being sold by a home owner that is in a hurry to sell to avoid facing foreclosure and the bad credit that goes along with it.

- Since you won't be at an auction, you will be given more time to talk to the home owner about any questions you may have concerning the house.

- Because the masses are more aware of where and when the government auctions are happening there are not as many investors competing for a pre-foreclosure property.

- The situation allows for more time to evaluate your finances.

- Auctions can be either overwhelming or lead to egotistical or emotional decisions.

- Less risk of potential problems because you can get a good look at the house ahead of time, and have it professionally inspected.

- All you'll need to buy a pre-foreclosed home is a down payment for as low as a few hundred dollars. At a government auction you would need more cash up front.

Make sure you bring along an inspector when you check out a pre-foreclosed home. You should also check to make sure there are no past judgement liens or unpaid taxes on the property. The risks in buying a pre-foreclosed home are not that much more then buying a home the traditional way through a real estate company.