Preforeclosures Vs. Foreclosures.
OK. I'm really new and I need some help in understanding the difference between Preforeclosures and Foreclosures. What makes one better or different than the other? How do I find either of them? Can a realtor guide me here, or is it too late once it hits the MLS?
Sorry for asking a stupid question, but I sure would appreciate some help!! Thanks in advance!! 
OK, a foreclosure goes to auction, and you bid on it. A preforeclosure is on their way to an auction. I feel a preforeclosure is a better deal, for the simple reaon, that your working one on one with the owner, and its usually a win win situation for both. With the auction foreclosure, you end up in a bidding war with other investors and families who want the home, and once the bidding is over, the owner has 30 days to leave.
[addsig]
A preforeclosure is when the homeowner still owns the house. A foreclosure is when the lender takes back the property from the homeowner. When you are dealing with homeowners in default they may not be thinking rationally. They may be thinking a miracle is going to happen and save the day. You have to convince them you are one of their last hopes to salvage their credit. When you are dealing with lenders after the foreclosure you will find more motivation to liquidate the property. Foreclosures do bad things to lenders(banks) ratios. Let me give you an example;you place $100,000.00 in a cd at ABC Bank they can then borrow an additional $700,000.00 from the federal reserve and lend out $800,000.00 but when they take back a $100,000.00 house they have to put $800,000.00 in reserve that cannot be loaned out. This said banks are in the business of lending money not owning real estate. Banks are far less emotional about houses than homeowners are about their home.
they actually fractionalize at a rate of 1/10, so they can loan out and get from the Fed $900k in your example.
Are you saying Michael that when they take back a property, the corresponding fractionalization ability is frozen, and they must keep the amount they could have fractionzalized and lended IN RESERVE?
Pm me if you could. THank you, Dave
So I guess the key is finding pre foreclosures to avoid the crowds. And how would a savy investor might go about finding these properties?
Dig through your local county's records. Many counties have all of this info available online. Others, you'll have to do the digging in the courthouse. Research foreclosures in your state to see what paperwork is filed before the auction, then dig through those, and bingo - preforeclosures. Contact the owners of the properties how you see fit - letters, door knocks, phone calls. Good luck (and maybe send some my way!).
Lake 2247 Gilbert AZ.
You can become king of your mountain.
You are probably the only one so active in your area.
You must at once visit your court house or hall of records, or Assessors Office and check how foreclosures are done in your fair state and in your county. If I remember you may be on line. But check.
Depending on the economics of the time you either work in three areas.
1. A person goes into foreclosure and it has started, a court action or a Trustees action depending on your state.
You solve his problem. By refinancing, By furnishing a secondary loan to bring him current whatever. If push comes to pull and there is no other way you help him by buying, or arranging the buying of his house. you also try and arrange his new place of housing. There is money to be made on all occasions.
Next approach is when he is about to really loose the property. The foreclosure is proceeding and it is getting up close to the actual sale. He must act or kaboom. At that point you either buy the property, give him a note for the property, give him some cash and a note for the property whatever your best deal.
The Third point. The property is sold at auction. There are no bidders and the bank gets it. At the point of sale you tell the Trustor or whoever is running the sale that you want to buy the property just as it is right now. You follow him to the office and you try to get a buy.
A plus. He takes your small downpayment and he takes back a loan on the property .
A . He sells you the property way under market cause he wants to dump so he does not have to hold reserves uninvested.
B Plus. He opens a sale with you and gives you a time to perform and you then assign your interest to another.For a profit.
These are the prime variations and I could give you about five more. But this is enough. I would not get into Sub2's yet. Work on these. Your areas is a little too small for Sub2s everybody knows the value of properties and the banks do too. Also you have to do a lot of running around and you need more experience.
Go for it. Have fun and try to Win/Win.
Lucius