Buying a Foreclosure Property - The Three Stages
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, you may need to be careful when approaching the homeowner because he may be under a lot of stress. In this stage, you will need to search for loans that are in default, create a short list of potential targets, inspect the homes, contact the homeowner, estimate the various expenses and the potential profit, negotiate with lender and owner, make the needed repairs, and resell the property to get 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. You will be required to pay the small deposit right after you won the bidding for a particular home to demonstrate that you are sincere in your intention to buy it. You will then be given a number of days in which to come up with the down payment. 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. Make sure that you have thoroughly examined the home before going to the auction and that you have already calculated the potential expenses required because the properties are being sold as is and without warranty.The last stage at which you can purchase a foreclosed home is after the auction where it is listed as Real Estate Owned (REO). 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. This provides you with several ways to negotiate for a lower price and easier terms. At this stage, the lender will have taken care of any unpaid taxes, liens and other expenses, which is a benefit for the investor because he is sure that he is buying a clear title.
Buying a Foreclosure Property - The Three Stages
By: Mike Bartonolis
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