A home or property is in pre-foreclosure after the lender files a public Notice of Default, which is a form of Lis Pendens, on the property when a mortgage payment is past due and before the lender can reclaim the property and sell it at auction. The length of the pre-foreclosure period varies; in some states it can last for as long as six months while other states have shorter periods.

During the time the property is in pre foreclosure, the owner can try to pay off the amount in default. If the amount is too much to pay off, the owner can try to sell the property.

Advantages of Pre-foreclosure Properties

If you are considering buying a foreclosed property, many real estate professionals recommend your best option is buying pre-foreclosure. During this period, owners are motivated to sell their home before it enters foreclosure, which will affect their credit rating. They may offer you a very good deal in order to offload their home and clear their debt.

During a pre-foreclosure, you also have time to get a comparable market analysis, research the title and have a home inspection. Furthermore, because the property is not yet for sale, you avoid the competition that normally occurs with real estate on the Multiple Listing Service (MLS).

Disadvantages of pre foreclosure listings

Even with the advantages of pre-foreclosure homes, there are some disadvantages to keep in mind. Borrowers unable to pay their mortgage for several months, most likely have not kept up the house. The home generally will sell ‘as is,’ requiring considerable repairs and maintenance.

Also look for judgments against the title – possibly an unpaid second mortgage – that could include late fees and other fines.

Where to Find Pre-Foreclosure Listings

You can find pre-foreclosure listings in local public records office – county recorders office or local courts – and in your local newspaper. On- and off-line firms also track pre-foreclosure properties. You can contact the property owner directly.