If you’re interested in pre foreclosure investing, you’ve no doubt had at least one person say to you, “Aren’t you taking advantage of that poor homeowner?”
If you had dealt unscrupulously with a homeowner and forced him into pre foreclosure, then, yes, you would be taking advantage of that homeowner. But when you locate a homeowner whose property is already in pre foreclosure, and offer to buy the property from him, you are not “preying” on him – quite the opposite.
A homeowner whose property is in pre foreclosure has three basic options. He can bring the delinquent payment situation up-to-date by paying the lender the total of all back payments and late fees within a certain time frame. He can do nothing, allowing his pre foreclosure home to slip into foreclosure, thus causing great damage to his credit. Or, he can allow a pre foreclosure investor like you to take the property off his hands for an amount that will pay off the outstanding mortgage, and walk away with his credit intact. You will also make sure that your offer is high enough that the owner will get some money for moving expenses and a deposit on a rental property so he can get a fresh start.
While it’s true that you’re likely to get good deals by investing in pre foreclosures, getting a good deal doesn’t make you a bad guy. In fact, many homeowners who find their properties in pre foreclosure would love to meet someone like you, and would be grateful to be rid of the burden of trying to come up with thousands of dollars they don’t have, or face certain foreclosure.
Pre foreclosure investing is a way to obtain real estate at below-market prices, from willing sellers, whose eyes are open to their options, as well as to their limitations. Pre foreclosure investing allows both parties to take full (and ethical) advantage of the situation – not each other.