Preforeclosures vs foreclosures

Hello everyone,

I’m a newbie to REI but am dedicated to learn everything I can and succeed. This is my first post and surely not my last. I would like to thank everyone in advance for any info that you can offer.

Now, for my question: I’ve been reading that a preforeclosure has more potential profit than a property in foreclosure. However, in this time of falling house prices and people filing for bankruptsy after owning for just a short time, owners often have no equity and owe more to the bank than the property is worth. How can an investor help both the distressed owner and satisfy the lender in this scenario?

Another question: With property prices forecasted to fall for the next 6 to 18 months (depending on what you read), the only way to make money is to flip the property fast (or hold onto the property until the market turns around). If the property is a rehab, the repairs must be done fast and the property sold before the price drops more than the original investment and improvement costs. Why would an investor take the risk of losing money so easily at this time? Wouldn’t it be much safer to wait until the market bottoms out?


hello ibeane,

in answer to your first question. investors can help the distressed homeowner by doing a short sale. you negotiate with the bank to accept less than what the home is worth. you can read more in the short sale forum of this site.

in answer to your second question. nobody has a crystal ball as to when the market will bottom out or turn around. you must factor the possiblity of the change in market with your offer price (ie/ you need to purchase at a bigger discount to minimize risk)

welcome to the forum.