Today we’ll talk about pre-foreclosures and lease-purchase options. Stay tuned!
Even though I’ve talked about them over my years in the industry, I still frequently get questions from people about pre-foreclosures.
You might have seen a property listed as a pre-foreclosure on Zillow before. The law states that the bank must notify the county as well as the homeowner when they’re about to foreclose on a home. Zillow has access to all the county records and knows when homes are near to being foreclosed upon.
So what does that mean for homebuyers?
Almost no sellers want to do a lease-purchase agreement.
Well, a pre-foreclosure isn’t a home that’s for sale. It just means that the owners have been served a legal notice by their lender and that it’s been recorded at the county. If the owner doesn’t get caught up on their payments, the bank will foreclose on their home, kick them out of it, and then sell the home. Many people think of pre-foreclosures as secret, cheap listings to capitalize on, but in reality, it usually takes between six months and year for the bank to foreclose, and the owners may well get caught up on their payments in that time. Again: These homes aren’t for sale. Of course, you can always check them out anyway, but I wouldn’t take them too seriously.
Another common topic that I hear about is lease-purchase options. Buyers will often call in with bad credit, saying they want a lease-purchase because they can’t get a mortgage. Here’s the deal: Almost every seller I’ve ever dealt with wants to get the money out of their house right away so they can go on to buy their next house.
If you do a lease-purchase, it means that you’re renting the house from them, and the seller doesn’t get the money out of it. Almost no sellers want to do that. Occasionally, we’ll find a listing where the seller states they’re willing to do a lease purchase, usually because they couldn’t sell the house in the first place or because it’s in really bad condition. Is that something you want to invest money in yourself? My advice to those looking for a lease-purchase option is to take the time to get your credit in better shape so you have the leverage to get your own house.
If you’d like to learn more about either topic we discussed today, don’t hesitate to reach out to me. I’d be happy to hear from you.