The number of pre foreclosed homes in the Chicago metro area soared by 10.2 percent to over 70,000 in 2009, according to data from the Woodstock Institute.

The institute said that more homeowners in the metro area defaulted on their home loans during the fourth quarter last year than in any other three-month period over the past four years.

In the last quarter, more than 24,000 homeowners were given notices of mortgage default, warning them about foreclosure if they do not make their accounts current. The figures also showed that defaults have been increasing in affluent neighborhoods.

According to Geoff Smith, senior vice president of Woodstock, foreclosures will continue this year in Chicago and in most other cities across the country because of continuing job losses and inadequacy of job creation programs.

Smith also said that the federal loan mitigation program would not be able to save homes as even reduced monthly payments would not be paid by unemployed borrowers. He added that there are also other unresolved issues such as underwater mortgages and adjustable-rate mortgages. Any recovery in the market, he said, will be wiped out as soon as the federal tax credit expires.

Woodstock data showed that pre foreclosed homes increased by the biggest rates in Lincoln Park, Near North Side and Near South Side, communities which had fewer defaults during the first year of the crisis. Previously hardest-hit communities like Hyde Park, Austin, Englewood and Auburn Gresham posted fewer defaults this year compared to 2009.

According to data from the Mortgage Bankers Association, as of October last year, nearly 10.5 percent of mortgage loans in Illinois were in default by at least 30 days but were not yet foreclosed, and another ten percent were delinquent by at least 3 months and already in foreclosure.

To step up local government efforts to fight and mitigate foreclosures, the Chicago Department of Community Development will increase its mortgage rescue events this year. The city will also continue to carry out its program of buying and fixing vacant homes with help from 43 selected developers.

Since July last year, the city has already received over $150 million to turn about 2,000 foreclosures into affordable homes.

In addition, Freddie Mac has also launched its program to cut down the number pre foreclosed homes in Chicago. It will offer assistance to distressed borrowers through the Neighborhood Housing Services and the Latin United Community Housing Association.

As a seller, you must be able to price your home based on tomorrow’s prices. This only means that you must be aware of market trends. For example, if home prices have been declining in the past year, you must be able to adjust your asking price accordingly. You must be able to price your home in such a way that they will be among the reasonably-priced properties.

In order to determine whether you have priced your pre-foreclosure home just right, you can observe how many buyers made offers during the first 21 days. If there were many visits but no offers, you can assume that the asking price is at least 5 percent above market. But if there were very few interested buyers, then your price is 10 percent above market. You should know that most buyers are actually willing to negotiate within the 5 percent price range but not the 10 percent.

If you think that you priced your home just right, you could always explain to the buyer how you reached that amount. You can also ask the seller how he arrived at his bid amount. This way, you will have a clear perspective during the negotiation.

On the other hand, If you have a broker, then your broker must be able to explain to you how he arrived at the current asking price. If you are willing to cut it in order to attract more buyers, let your broker know.

Pre foreclosures are very attractive to investors and homebuyers, because they offer the opportunity to find great real estate for a very low price. In addition, buying a pre-foreclosure means buying direct from a homeowner, which cuts out the cost of an expensive broker’s fee. For many defaulted homeowners, selling their property is a very attractive option, because it allows them to avoid a credit ruining foreclosure, and even walk away with some extra money in their pocket.

Often times, homebuyers and pre foreclosure owners are able to work out mutually beneficial deals, and this can be very satisfying for both parties involved, since the deal with save a homeowner from having to go through a foreclosure. Often times, the only trouble is finding pre foreclosures, since they are not advertised like traditional foreclosure auctions.

The best way to locate pre foreclosures in your area is through an online listings service. These can provide great information on pre foreclosures and direct you to contact information so that you can get in touch with homeowners facing foreclosure. A good example of an excellent source for pre foreclosures is BankForeclosuresSale.com, which specializes in providing quality pre foreclosure listings, and in our experience provides excellent and accurate information. You may have to shop around a bit to find receptive homeowners, but in the end selling a pre foreclosure is as much a benefit it to them as it is to you.

How does foreclosure work? – Get the answer for this question.