So you want to know how to purchase a pre-foreclosure home. You want it to be a "fantastic bargain." So you ask, "What is the best way to buy a pre-foreclosure house?" If a fast start appeals to you than you may want to Kick Start Your Foreclosure Investing.

If you want more information, however, because you are undecided how to approach this business, then I want you to understand that I can't just tell you - "Here are the rules. Just do this..." Sorry, but it usually does not happen that way.

Foreclosure investing consists of too many factors and variables. There is, though, a great place to start. One of the first things you will want to know is how to recognize a a "great buy!"

Any seasoned pre-foreclosure purchaser or investor will tell you that the key to a fantastic buy centers around a motivated seller. You can translate motivated seller to any person that wants or needs cash more than they want their property. How badly they want cash more than their real estate determines how motivated they are. In foreclosure investing there are three primary types of motivated sellers. They are foreclosure auctions, REO's, and pre-foreclosures. Examining these three types, and the buying opportunities that each represents, quickly illustrates why you probably want to focus on pre-foreclosures.

The three types are:

1. Foreclosure auctions can take several forms, but the most common are Sheriff's Sales and Trustee's Sales. At a Trustee's Sale the foreclosing lender usually bids for the property at the unpaid balance plus penalties, accrued interest, and fees. Anyone who bids a higher amount can walk away from the auction with limited ownership rights. As with all real estate purchases, however, laws vary from state to state, and you must be a aware how your state's laws may affect you. Also, you do not immediately receive title to the property, nor is it possible to obtain title insurance before your purchase. Therefore, unless you are a professional foreclosure investor, foreclosure auctions may not be your venue.

2. R.E.O. stands for Real Estate Owned. Homes that fall into this category represent properties upon which banks have already completed the foreclosure process. These assets currently serve the bank no purpose as there are no payments being made against them, thus the bank does not benefit from any rate of return. The owners (banks) seek to sell these properties and clear them from their books. It is possible to uncover sweet deals going this route, but, remember, you will be negotiating with a bank employee who does nothing but work these transactions. You might want to place this technique on hold until you've completed a few transactions elsewhere.

3. Pre-foreclosures probably represent your best bet if you are new to the game. That's because you are dealing with a homeowner who has already had a Lis Pendens or Notice of Default filed against their property. This occurs at the local county recorder's office. Depending on the state in which they reside they have a set amount of time before they lose their house to foreclosure. They are already behind on payments. They need money NOW, and, typically, they are not professionals at this business.

Given the above information, which category of motivated seller presents the best avenue for purchasing foreclosure properties? Most investors agree that buying pre-foreclosure homes equates to the simplest approach. Be aware that none of these three categories mean an easy transaction, but dealing with a homeowner who has recently been served a Notice of Default is almost certainly easier than raising cash for an auction or dealing with a bank's R.E.O. department.

If you want to get a feel for how many of each category currently exists where you live, you can compare numbers of pre-foreclosures, auctions, and REO's in your specific county by using a good Foreclosure List

If, after investigating the above link, you agree that pre-foreclosures seem to be the path you wish to follow, then you must learn the basics of how to purchase pre-foreclosure homes from individuals. It's not an easy task, learning the skills you will need, but it's important. Mastering these steps will eventually lead to you being able to buy pre-foreclosure houses at will. Once you have one or two transactions under your belt, you will soon see the advantages of being a pre-foreclosure purchaser or investor. In order to get you on your way, let's take a look at the steps you must take to begin your road to pre-foreclosure profits.

After you have located a motivated seller you will need to contact them in order to convey that you are interested in purchasing their property. You want them to understand that you will be paying cash for a portion of their equity. Equity is the difference between how much they owe and how much their property is worth. In order to make an offer like that you need to know how much equity actually exists in the subject property. It becomes a major time drain to research the equity on every pre-foreclosure property in your area. So use a search tool like this one in which you can Search By Equity.

Once you possess a list of candidate properties, the time to contact the seller has arrived. Be mindful that the sellers at this point are gun shy. They receive untold numbers of mailers and phone calls from people wanting to "help" them solve their problem. So you want to stand out from the crowd. In order to do that, take the time to compile a list of benefits the seller will enjoy if they choose to deal with you.

These include:

1. Cash in exchange for their equity. If you are concerned right now that you do not have the cash to offer them, don't fret. You can obtain training in raising capital investors. You can then partner with them, or earn a finder's fee. The course offered through this link offers in-depth training in raising money - Foreclosure Training.

2. "As Is Transaction". This means that you will buy the property "as is", in its current condition. No repairs will be required. Of course, you will need to know what to look for so that you have a solid idea for yourself what it will actually cost to bring the property up to snuff.

3.No loan contingency. If you follow the method I'm outlining to purchase your pre-foreclosures, then you will have the money available before you need it in order to complete the transaction. Again, this information can be easily obtained at - Foreclosure Training

4. Quick close, perhaps a week or less. This pulls them out quickly from beneath the burden foreclosure creates.

5. Cash in their pocket. You will want to structure your offer so that there is enough cash going to the seller, after all liens have been paid, for them to start their life over.

6. Save their credit from having a foreclosure on it. A foreclosure on your credit makes it extremely difficult to buy a house again for a long time. You can save them from that wait.

7. Fixed sales price. If their house goes to auction they may not receive a single penny because chances are it won't sell for more than is owed on it plus accrued costs.

We have explored in this lens two essential first steps that you will want to take in order to begin your foreclosure business on the right path;

a. Find a motivated seller
b. Know and convey to the seller the benefits they will receive by dealing with you

This lens does not go into depth as to what you need to know to really succeed at buying and selling pre-foreclosures. My purpose, instead, has been to give you a brief introduction. For in-depth training you may want to explore Foreclosure Training which has extensive free training materials for you to use.