The strategy to use in buying a foreclosure property will depend on the stage in the foreclosure process in which the home is in at the time when you make an offer. The first stage is the pre-foreclosure process after the Notice of Default has been issued and the lender is still preparing for the auction. At this step in the foreclosure process, the homeowner may have already realized that he is bound to loss his home and that it would be best to look for a buyer. However, it is important to be careful because of the strong emotions that the homeowner may be undergoing. The steps to follow in this stage are to look for loans in default, make a list of possible targets, examine the properties, contact the borrower, determine the necessary expenses and the possible profit, negotiate with the bank and the borrower, perform the necessary repairs, and flip the property to gain the profit.
You can also purchase a foreclosure property at the auction itself but you need to be prepared to make a small deposit and come up with the down payment within a number of days. To show that you really intend to buy a particular property that you have won in the bidding, you will have to pay a small deposit on the spot. You may then be required to pay the down payment within a matter of days. Thus, it is important to bring the deposit with you to the auction and to prepare the source of your funds for the down payment before you participate in the auction. Because you are buying the property as is, it is also essential that you have inspected the property before participating in the auction and that you have made estimates of the various expenses that are needed before you can sell the property.
A property that is not bought at the auction is listed as Real Estate Owned (REO) and this stage provides the easiest way for an investor to choose a foreclosed home. The investor can negotiate large discounts when purchasing REO homes because the lender is very much motivated to sell the home and convert it into cash that he can lend. You have much opportunity here to negotiate easier payment terms and a reduced price. Buying at this stage has the added benefit of being assured that you are getting a clear title because the lender would already have paid off any outstanding taxes, liens, or any other unpaid expenses. Read more at foreclosurenews.com
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