It's a fact of life that many homeowners lose their property to foreclosure every day. As an investor, if you are willing to put in the necessary time and research, this provides an opportunity to buy properties at a reduced price.

First, let's take a look at the process of pre-foreclosure. Once a homeowner has defaulted on their mortgage payments, the lender will file a public default notice. This initiates a grace period, known as pre-foreclosure, during which the homeowners can try to pay the default amount or sell the home themselves.

This grace period varies, as it's set by individual state laws. If a homeowner realizes that selling is their best option, and you can offer them a fair deal, this can be a great win-win opportunity for both the homeowner and you as an investor. They avoid foreclosure and so don't have it entered on their credit, and you get a well priced home.

Lists of pre-foreclosure properties are available through many local sources, but it can take time and effort to search these listings regularly. It's often much simpler to sign up with a reputable online listings service, such as Seized Real Estate, so that they can do all the hard work for you.

It's important to realize that many homeowners in pre-foreclosure are not going to be happy about the situation. Many don't want to accept that they're going to lose their house, and so may be abusive if you contact them with an offer to purchase. Don't get too hung up on pursuing one particular house. If the owner is uncooperative, move on.

There are a whole range of ways you can offer to purchase the house, including:

- Buy it outright using finance

- Pay the owner an amount similar to their equity in the property and assume the loan

People skills are of the utmost importance when discussing possible options with the homeowner. If your goal is to set up a deal where you basically rip them off in a big way, you're unlikely to be successful. You may even get abused or attacked, so don't do it.

You need to work on finding a solution that works for both of you. It's never going to be in the homeowner's best interests to sit back, wait for foreclosure and let the lender sell the property. But that doesn't mean they have to accept an offer from you in the meantime. If your solution is fair, however, you'll have a much better chance of success.

Buying pre-foreclosure properties isn't always easy, although finding ways to leverage your time, including the use of a listing service, does make it easier. But if you exercise patience and persist, over time you can either build up a sizeable property portfolio, or sell some of your properties to take out your profit.