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