Buying a pre-foreclosure

The pre-foreclosure process is long in Wisconsin, usually 10 months to 1 year. When you visit foreclosure sites and they “alert” you to a new home, this simply means the foreclosure process has begun. Many buyers mistakenly think this is a good time to buy the house, however there are many ways the homeowner can attempt to get out from under the foreclosure: work with the lender to refinance or lower the rate; sell the home as a for-sale-by-owner, list it with a real estate agent or simply walk away.

One scenario homeowners find themselves in today is called being “upside down” in their mortgage, this means they owe more on their mortgage than their home is worth. Attempting to sell a home in this scenario often results in a “short-sale.” The owner must bring to closing money to pay off the mortgage if the accepted offer on their home is less than the current mortgage debt. Some lenders will work with the former and prospective new owner to write down the debt, but do not count on it.

Owners being foreclosed on are not happy people. Some will take their frustrations out on the property, some will take it out on the person who calls out of the blue asking to buy their house. Buying a home in foreclosure is not easy, is often not a great deal, and requires patience beyond most of us.
If you find a home you just must have that is currently in foreclosure you have a few options:

• Call the home owner and make an offer (not recommended)
• Hire a real estate agent to contact the home owner (much safer for you)
• Contact the lending institution (laws prohibit the release of certain information)
• Wait for the process to reach a sale point
  

Your agent (buyer’s agents are the only ones who will tackle this issue) is the one trained to work with pre-foreclosures and offer your best option before a “for sale” point. Once the home has been listed or offered for sale you can work on your own or hire an agent to help you through the arduous and often extremely long process. Lending institutions (not all) have been known to take up to three months before responding to an offer to purchase. Be aware of your timeline and make a decision whether you can afford the delays.
Lenders are also loath to lose money. The idea you can swoop in and offer half the market rate for the house are infomercial dreams. Sometimes the lender will accept an offer less than they have in the property, but it doesn’t happen often.