Purchasing distressed properties during the pre-foreclosure phase of legal action is a great idea for real estate investors. During this time, you can work directly with the homeowner and this saves you a great deal of headaches, hassles, and legal red tape.

This is the only time during the foreclosure process that you can inspect the property freely, make an offer, and close the deal much like you would in a traditional real estate transaction. But unlike a traditional sale, buying pre-foreclosures allows you to purchase property significantly under value.

Once you have located a good property investment that is being foreclosed upon, you will need to contact the homeowner to begin negotiations. This is the toughest part of buying pre-foreclosures because emotions are very high at this point in the homeowner’s life.

Your first contact should be made delicately with the homeowner’s vulnerable position forefront in your mind. Keep in mind that he is likely besieged by phone calls from creditors and will likely view you with more than a little skepticism.

Since the homeowner is likely screening his calls, you might find it difficult to get in touch with him. You could start the buying pre-foreclosures process by contacting the homeowner by mail. Letters are less threatening, and if they are worded the right way may get you an appointment with the homeowner.

Follow these letter-writing guidelines for buying pre-foreclosures:

• Make sure the envelope is nicely hand written so it looks personal and not like another bill collector. Letters that are too professional looking may also be a turn off. If you want the stressed-out homeowner to even open your letter, it must look non-threatening.

• Word your letter in a friendly way that makes the homeowner feel like you are trying to help him. Outline exactly what you can do for the homeowner. When buying pre-foreclosures it is common for the investor to pay off the loan and give the homeowner a little cash to pay off some other bills.

• Give the homeowner a way to contact you at his convenience. Never threaten or pressure. If your letters get no response, simply increase your efforts by sending more letters, but no more than two per month. A couple of phone calls might also do the trick, but only begin these as follow up to mail correspondence.

Once you have made contact with the homeowner, continue to be sensitive to the homeowner’s position. When buying pre-foreclosures you should never judge or treat the homeowner in a condescending manner.

A more effective strategy is to meet with the homeowner face-to-face. While this sounds daunting, it is by far the best way to close the most deals. Learn how to approach the homeowner during this time, and how to get them to work with you, and you will get far more deals.

About the Author: Chris Thomas is a real estate investor and author of the best selling ebook "Dominate Preforeclosures," which teaches you how to acquire property in pre-foreclosure with a successful, proven way to approach homeowners and get the deal. Learn the strategies that the top investors use daily, but refuse to share by visiting http://www.dominatepreforeclosures.com.

Technorati Tags: Foreclosure Investing, mortagages

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We have all heard the saying that if it is just too good to be true that is probably is. And yet we seem to keep falling for the "good deal". This saying is coming home to haunt many home buyers who took advantage of "teaser" home mortgage rates over the past several years. These teasers sucked many of the unwary borrowers into a trap that has now snapped shut and they face losing there homes to foreclosure.

Thousands of home owners have already lost their homes to foreclosure and thousands more face this possibility every month.

A plan is now being negotiated by the Bush administration and some of the major home mortgage lenders to bring some relief to the situation. Full details have not been disclosed as this is still a work in progress.

Expected to be announced within a week by Treasury Secretary Henry Paulson, the plan hopes to help virtually all groups impacted by adjustable rate mortgages (ARMs) that adjusted to levels quite unexpected by the borrowers. Those homeowners who have been unable to keep up with their payments even at the low teaser rates would not be included in the plan.

The plan was labeled "an important building block in our efforts to address the mortgage and credit crisis" by Rep. Rahm Emanuel (D-Ill.). He has asked the  administration's help in approving a House bill designed to ease the housing problem.

Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, was "encouraged" by the move to "seek large-scale loan modifications for borrowers, who, facing interest rate resets, are in danger of losing their homes."

Any plan that could help slow the worsening credit crunch in America and across the globe has got to be given careful consideration. I can't help but wonder though where the interests of our Washington representatives actually lie. Are they really trying to look out after Mr. and Mrs. America or with the large financial institutions and investors who will benefit greatly by a government bail out?

In any case, we need to keep in mind that there are better ways of buying our home with little cash and no credit than to fail prey to a broker's "too good to be true" teaser mortgage.

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Professional real estate investors know that buying foreclosure real estate can be difficult, frustrating and at best a total waste of time. That is, it can be all of those things to an unwary new investor straight out of a "Make Big Money In Foreclosure Real Estate" seminar. But for the knowledgeable investor, foreclosure real estate really can be a satisfying source of good income - and a golden opportunity for first time homebuyers.

The Right Type Of Person

Most home buyers shopping for a personal residence do not even consider foreclosure property because of the imagined problems. But they should. It is puzzling in a way. There are many couples starting out without much money or credit who buy a "fixer" and spend considerable time and money fixing it up while they are living in it. They then turn around and sell it to move up to a more expensive fixer and begin the process all over again.

If this describes you, you should really consider a foreclosure property. But you need to equip yourself with a little knowledge first so you don't suffer the pain and disappointment common to so many trying this route. Let's start with the basics.

The complete article has been published on EzineArticles.com. You can read the rest of the article here: http://EzineArticles.com/?id=718434

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The current unease in the real estate and mortgage industries seems to have spawned a whole new wave of seminars guaranteeing riches by investing in foreclosures. It is understandable. The markets are unstable. There have been increases in mortgage defaults and this trend will probably continue for some time. But most of the get-rich-quick seminars lead many to believe that all they have to do is write a few letters, make a few phone calls or show up on the court house steps and their dreams will come true.

Unfortunately, this is far from the truth.

There is good money to be made in all kinds of real estate investing including foreclosures. There always has been and always will be. The market goes up and down but it really doesn't matter too much. Investing tactics change with the times but the margins and profit potential are still there.

But you have to know what you are doing and what not to do. You need to examine every detail of every deal or reconcile yourself to losing rather than making money.

Investing in a property during the pre-foreclosure process takes some of the inherent risk out of the business. There are still pit-falls but you have more time to examine the deal and avoid them.

I have gained access to a great little report "Foreclosure Investing Basics - How to Rehab a House and Avoid 8 Critical Mistakes" that goes a long way toward helping you make rather than lose money in this market. Feel free to download the report by right clicking the link and "Saving As".

The report is written by Chris Thomas, the author of Dominate PreForeclosures. If you would like to explore the pre-foreclosure market a little closer, and I would encourage you to do so, and can heartily recommend his ebook Dominate PreForeclosures. He reveals the techniques he actually used and still uses, unlike some seminar gurus.

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