| When homeowners fall behind on mortgage | | | | all properties progressing to the trustee's |
| payments, foreclosures may occur. A | | | | sales (auctions) have no bidders show up. The |
| foreclosure is a process in which a financial | | | | instant that no bids are made at the sale, |
| institution repossesses or sells a piece of | | | | the foreclosing beneficiary (bank or lender) |
| property because of a loan default. Mortgage | | | | becomes the owner. Banks and lenders are now |
| lenders usually consider a mortgage to be in | | | | getting these properties back regularly. It |
| default when payments haven't been made in | | | | is very expensive for them to be stuck with |
| three months. When mortgage loans are in | | | | these properties! The costs to the lender |
| default, the mortgage lenders can start the | | | | would be enormous in the event that they |
| foreclosure proceedings of the properties, | | | | chose to list the property with a broker and |
| and so opportunities arise for investing in | | | | many months elapse during the clean up, the |
| foreclosures. | | | | marketing, and the escrow period. The whole |
| | | | key for you to be able to invest in |
| There are three ways you can get a great deal | | | | foreclosures at this stage is to act quickly |
| in investing in foreclosures: at the | | | | by approaching the beneficiary (lender), the |
| pre-foreclosure stage, that is, before the | | | | same day of the sale, before he turns the |
| homeowner falls so behind in his mortgage | | | | property over to a real estate agent for |
| payments that the property is foreclosed; at | | | | resale. Your quick action at this point can |
| an auction of foreclosed properties; or from | | | | save you tens of thousands of dollars. |
| a Bank owning foreclosed properties. | | | | |
| Information is everything! You need to have | | | | As a general rule, when a property has a lot |
| up to date accurate information, an absolute | | | | of equity you should approach the owner |
| essential for investing in foreclosures. You | | | | during the pre-foreclosure or default stage |
| will need a source for knowing what | | | | with an offer. It's in his interest to accept |
| properties are going to sale, for how much | | | | an offer of a few thousand dollars to get out |
| and when. | | | | before losing everything at the foreclosure |
| | | | sale. When a property has little or no |
| Success in buying homes in pre-foreclosure is | | | | equity, you simply step back, be patient and |
| all about timing and it is essential that you | | | | wait for the trustee's sale at auction. The |
| reach the homeowners early on to help them. | | | | trustee's sale will wipe off all previous |
| When a homeowner is unable to pay one or two | | | | liens, creating equity. Ten to 20% of the |
| mortgage payments, you can be pretty sure | | | | time no outside bidder will show, and the |
| that a probable foreclosure is ahead. Many of | | | | property will revert to the foreclosing |
| these homeowners don't know who to turn to. | | | | beneficiary. Now is your perfect time to low |
| They are mostly scared and/or worried. | | | | ball the bank or lender with an offer |
| Wouldn't anyone be fretful in the same | | | | substantially below the minimum bid at the |
| situation? As an investor you have to think | | | | trustee's sale before he incurs any costs, |
| about the reality these people are facing and | | | | such as commissions, clean up, repairs and |
| present them options in a hopeful manner, to | | | | holding costs. |
| help them move forward in their lives. | | | | |
| | | | There are three key elements to investing in |
| The second way you can find great deals in | | | | foreclosures with the lowest possible amount |
| investing in foreclosures is at auctions. | | | | of capital. First you must know which |
| When borrowers default on their mortgage | | | | properties are in trouble and know exactly at |
| payments, the original lender takes back the | | | | what stage of the foreclosure process the |
| property and sells it at auction, often at a | | | | property is in. Second, it is critical that |
| seriously discounted price. Your main | | | | you know how much time the owner has left. |
| advantage of investing in foreclosures at an | | | | Third, you should always find out all the |
| auction is that the moment a property reaches | | | | trust deeds (loans) that are against the |
| the actual sale date, all trust deeds (loans, | | | | property so that you can establish the lowest |
| depts.) made after the foreclosing loan are | | | | possible price to offer. You should have some |
| wiped off the property. In this way you can | | | | way of getting these three elements |
| get instant equity. If you're the winning | | | | researched as completely as possible on every |
| bidder at an auction you will pay off the | | | | property giving, so that you get all the most |
| loan with your winning bid amount and you'll | | | | important information that any buyer can |
| then take title. | | | | have. To do this you need a first-class |
| | | | reputable and reliable foreclosure |
| Lastly you can also find great opportunities | | | | information service, to enable you to |
| for investing in foreclosures with properties | | | | successfully profit through investing in |
| owned by banks or other lenders. 10-20% of | | | | foreclosures. |