Find Great Deals and Profits with Foreclosure Investing
Foreclosure
investing can be one of the best methods for finding deals. As
investors, we are constantly looking for motivated sellers. When a
seller gets into a foreclosure situation, they can be extremely
motivated to do something to save their credit.
In recent times, foreclosures have been happening in record numbers.
This just adds to the number of potential deals that are available for
us as investors. It is really just a matter of understanding the
process and knowing how to profit as an investor.
There are several stages during the foreclosure process. As an
investor, you want to have a knowledge of each stage of the process so
that you are able to know how to find and profit from each.
Each
of the foreclosure stages will have its own page to cover the details
of the stage. The purpose of this page is to give an overview of the
entire process and what happens in a foreclosure from start to finish.
The stages of the foreclosure process are:
- Preforeclosure
- Auction
- Bank Owned Home (REO)
During the preforeclosure stage, the home owner has stopped making payments. The lender will start sending the homeowner letters saying that if they do not bring the loan current, that they will begin the foreclosure process. This is one part of the foreclosure process that can be a great opportunity for foreclosure investing.
We can step in, help the homeowner out of a difficult situation, and make a profit at the same time.
If the homeowner owes too much on the loan, we also have the option of doing a short sale on the property. This is still a preforeclosure deal, but the lender is going to accept an offer that will be less than the loan balance. In this section, we will explain how to put together the short sale package and work with the loss mitigation representative.
If
the homeowner is not able to bring the loan current, then the lender
will foreclose on the property. Once they have foreclosed, the county
is going to hold an auction
on the property. During the auction, the
lender will place a minimum bid on the property that is usually equal
to the amount that was still owed on the loan. That way, if anyone bids
higher at the auction, the lender gets their money, the buyer gets the
property, and everyone is happy. If no one bids higher than the lender,
then the bank will take back the property. Important Note
Foreclosure laws are constantly changing in many states as a result of the increased number of foreclosures. In some states, there are restrictions on what you can do with a foreclosure property. Many states prohibit any type of reconveyance to the owner (either renting or selling it back to the homeowner). If you plan on doing foreclosure investing, you should seek a local attorney that is familiar with the foreclosure laws in your state.
The auction can be a profitable time to get involved as an investor. It really depends on the resources that you have available, your experience at the auction, and dealing with the competition at the auction.
Let's assume that no one bids higher than the bank. If that is the case, the bank will take back the property and list it with a real estate agent. The property is now a bank owned home or real estate owned (REO). This type of foreclosure investing can be a good opportunity to pick up some great deals.
The important thing to keep in mind is that foreclosure investing is not a technique. Foreclosures are simply a way of finding potential deals. All of the strategies that we teach will work with foreclosures. We use foreclosures to find the deals that are profitable.
