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