The word "foreclosure" translates into images of bargain-basement buys. The first thing you should do is block these visions
of paying 10 cents on the dollar. In these times of a very strong real estate market, such a deal is nearly impossible.
HOWEVER. To expect 20 - 50% off the market value of a property is not unrealistic.
Types of Real Estate Foreclosure
- Judicial Real Estate Foreclosures
- Non Judicial Real Estate Foreclosures
There are two types of Real Estate foreclosures: judicial
. The difference is that judicial real estate foreclosure
requires a lawsuit filed in court, while a non-judicial real estate foreclosure circumvents this process. Although some states allow both procedures, there is usually a dominant foreclosure type in each state.
If you are interested in buying real estate foreclosed homes as investments, this can be a very profitable option. In most cases, someone will buy a foreclosed home, complete any repairs, and sell it quick. People that do this as a business find it to be quite profitable.
Real Estate Forclosure Courses
Ways To Purchase Real Estate Foreclosures
Buying Foreclosed Homes at the Auction
When you hear of a house selling on the courthouse steps, this is actually what happens. There will be lenders and investors all outside on the steps bidding on the house. This type of bidding is very intense and the process moves fast. To avoid devastating results, it is necessary that you conduct as much research as possible.
In order to be involved in auction buying, you first need to do the following:
Thoroughly research any properties you are interested in prior to the sale
Keep your options realistic
Weigh out the financial profit if you should win the bid
Decide what your highest bid will be and stick with it
Savings off market value can be as high as 45%
Outstanding return on investment
Auctions can be postponed
Seldom are there opportunities to inspect the house before the sale
Title searches can be costly
Requires large amounts of cash to be laid out
This Real Estate Foreclosure is a deal between the homeowner, seller, and in sometimes, the lender. This can be a very successful way for both parties to make a quick transaction. First, start by seeking for loans that are in default. With this option, you will be able to inspect the home and determine what the seller's needs are. Next, you will need to find out the actual value of the home, what it will cost for repairs, and how much profit you could make on the resale. To stay ahead of the game, you will need to make any repairs as quick as possible and turn a quick sale after you purchase the home.
Discounts off market value as high as 40%
Requires a very small down payment
Provides time to conduct research on specific properties
Sales agreements can be customized and flexible
Homeowner can sometimes be hard to reach
Competition for the purchase is high
Possibility of negotiating with other lien holders (second mortgages, Government liens, etc.)
Real Estate Owned (REO)
Of the different types of buying foreclosed homes, this is probably the easiest. In this situation, a lender will take their
property back in order to regain possession and then accept the loss. Since the lender does not want to keep the house, they
are considered motivated sellers.
In the majority of cases, the lender is the senior lien holder, which removes all other liens
There is always a clean title
Normally any property tax in arrears has been paid by the lender
In some instances, repairs will be done by the lender
Savings are generally much lower - 10% to 20%
If you have decided to purchase a foreclosed home,
be sure to do as much in-depth research as possible. Although you
might not be able to inspect the home, find out as much about the property as possible to save yourself from making a big mistake.
Keep in mind when bidding on a foreclosed home, any unrealistic bids will not even be considered. Work with some local banks
to determine what an appropriate bid is, what kind of down payment you should expect, the current interest rate, and as much general information as you can.