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Let me give you some reasons why:

1.) When people are in default on their mortgage they have stopped making payments to the bank. So when you are negotiating with the seller or the bank, right up until the point when you buy, no-one is making the payments. They are losing money everyday and this gives you an advantage right of the bat. Lenders are under pressure to liquidate bad loans rather than take the property back

2.) Sellers in pre-foreclosure are some of the most motivated sellers you will find. Their world has been turned upside-down, they are about to lose their house, and their motivation is such that they just want out of the house and the bank off their back. They are likely to take a low ball offer.

3.) Buying a house in pre-foreclosure enables you to create unusually large equity increase. Recent economic uncertainty has caused a lot of foreclosures, and rising rates will cause more in coming years. By requesting the lender a discount of what is owed on their payoff, large equity can be created on houses that are totally “maxed out” with loans. This cannot be done on loans that are not in default and since you are buying the property at a lower price, your down payment and closing costs will be much less reducing your investment considerably.

Make no mistake about it; there are many ways to make real estate investing, but when you look at how easy pre-foreclosure makes it to buy houses cheap, it makes more sense.

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Let me illustrate some of the several things sellers actually do to keep their homes from selling or better yet, keep buyers from wanting to see their home.

1. First they pay no attention to the market, statistics, trends and reality in a seller’s Market.
2. They insist on a set price and remain 90 to 180 days behind the market by refusing to reduce the price to a marketable level.
3. They provide a telephone number that nobody answers or has been disconnected.
4. Never leave the house when buyers want to see it. They stay so they can watch them closely.
5. Let the weeds grow high enough to hide the trash in the front yard. If buyers can’t see the trash they won’t know its there. Who cares about first impression?
6. Keep lots of clutter by the front door. If there is a lot of junk there the buyer will have to slow down and see the house.
7. Leave lots of dirt and dust on ledges and corners. It hides the deteriorated paint underneath.
8. Leave furniture facing in different directions and make sure that love seat is covering the hole in the wall. Trash is good, holes are bad.
9. Challenge the buyer. Let them guess what the room is for. Just because it has a closet doesn’t mean it’s a bedroom.
10. If it’s broken, they leave it. Let the buyer fix it if they want it fixed.
11. Leave the old appliances. They add character to the house. Especially if they don’t work. Save your money for the next house.
12. Leave store boxes in the hallway. The buyer does know they are moving, why hide it?
13. Tell their friends to keep their opinions to themselves. They are the sellers; they know better than everyone else what to do to sell their home.

Considering the tough market we are in, it is not always the reason why your home is not selling.

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You will want to include the following information in your ad: Date and time of the sale, your address, and special items you have for sale that will draw customers. Be sure to mention items that are in demand (Like toys; collectibles; furniture). Make sure that you have signs strategically place in your community. Place them in high-traffic intersections within a few miles of your home. Use bright Yellow or Lime green paper colors with big lettering, they work well.

Price your Items

Mark every one of your items. You will avoid a lot of questions and haggling this way. Groups of similar items such as books or Cds are an exemption; it might be easier to just mark them $1 each rather each one of them. You might be able to get more in some items and less on others. Obviously new items will bring more (especially if the price tag is still on it!). When pricing, use quarter-dollar increments. Making change will be a lot easier.

A Note on Clothing

I have found that people are willing to spend good money on quality kids’ clothing at garage sales, but not adult clothing. If you have a lot of adult clothing that is in good condition and still in style, consider taking it to a consignment store instead.

Create the Atmosphere

Have a pleasant easy-listening music playing in the background; shoppers will linger longer. If your sale is in a hot day, you may want to have a large tub filled with ice and pop for sale. Have proper lightning; be sure it is not too dark in your garage.

Finishing Up

Be sure you remove your signs promptly. You do not want people knocking on your door after the sale is over. Then enjoy the best part…. Counting the money!

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