How do you buy one? HUD homes (Housing and Urban Development) require a written bid, and except for those homes offered through exclusive listing contracts, HUD sells homes only through sealed offers. You can use any HUD approved real estate agent to help you submit one. For bank foreclosures, the procedures may vary. Auctions are usually advertised in the newspaper with specifics as to how much of a deposit will be required by bank check to secure the bid the day of the auction.

Please bear in mind that foreclosures homes are usually sold in “as is” condition. It is therefore critically important that you thoroughly inspect the home before deciding to buy. Do not fail to calculate what repairs on the foreclosure may cost by obtaining a bid from a contractor. Strangely, in quite a few cases, when you add the cost of the repairs to the purchase price, you may end up paying much more than you originally envisaged.

Now let us examine buying pre-foreclosure homes which are lot cheaper then even foreclosure homes. The basic advantage in buying pre-foreclosure is buying the home at under market value price. If you are an investor in real estate, then buying pre-foreclosure is a windfall income. However, no matter investors or home buyers, you should first understand pre-foreclosure in order to avail the benefit.

Pre-foreclosure is the first stage of a home being foreclosed. This happens when the home owner has missed at least one payment and is now considered delinquent on the loan. The home owner receives a formal warning sent to the homeowner. The homeowner will be given a certain period to respond to the borrower. In this state, home owners are somewhat desperate and look for prospective home buyers to bail them out.

It should be understood that the home owner is passing through a bad patch in his life that has caused him to fall behind in his mortgage payments. Therefore, foreclosure home owners are very distressed when borrowers send in the warning of foreclosure. Remember, you as a home buyer can always help these foreclosure homeowners. If you are able to buy the foreclosure home with some amount above their mortgage balance, homeowners would settle part of their financial problem. Thus, buying pre-foreclosure is a win-win situation for both buyer and existing homeowner. You can get a under market value foreclosure home while homeowners could settle their unpaid home loan. However, the biggest challenge of buying pre-foreclosure is getting the attention of homeowner. Thus, acting fast and effectively will help you to reach pre-foreclosure homeowners.