If you are an investor or just someone looking for the right investment, you may want to consider foreclosures. You can purchase foreclosure properties and make a sizable profit when they are resold. There are certain strategies you can utilize when dealing with foreclosures. During the foreclosure process, you can purchase a home at various stages. When you decide to purchase the home may decide how profitable your purchase turns out to be.
Instructions
1. Find foreclosures at all stages of the process. There are some websites that identify what stage a foreclosure is in. You can visit the website and key in the ZIP code of the area you are interested in and a listing will be available to identify all foreclosures in that area along with their stages. A foreclosure can be in the pre-foreclosure stage, auction stage or the bank-owned stage.
2. One of the stages is the pre-foreclosure stage. This is the stage when a lender issues a notice of default to the borrower stating he is past due. It files this notice with the county courthouse. This starts the foreclosure process. You may be able to make a deal with an anxious borrower who does not want to see his home foreclosed upon. There are pre-foreclosure listings that provide all of the information such as the address and balance for the account. If you purchase a property at a substantial discount, you can sell the property for a profit.
3. Review the auction stage. When a home is foreclosed upon, it has to be sold at an auction, if the borrower does not find another method to remedy his foreclosure. You can attend the auction and bid on the home. The minimum bid usually starts at an amount equal to the principal balance, interest, costs, plus attorney fees. When you bid, you may be required to have a cashier's check for 10 percent of the amount you are bidding (if you win the bid). In most cases, you will be given 30 days to obtain financing for the remaining balance. When a home goes to a sheriff's auction, you will not have access to the inside of the home.
4. Contact banks regarding the bank-owned stage. Sometimes a home will go to an auction and no one will bid on it. When this happens, the lender will then become the owner and the mortgage will be wiped out. The bank will then try to sell the home for as much as possible. Banks usually try to sell these homes in their current condition without doing any repairs. According to Realestateabc.com, some banks have entire departments that they utilize to handle their real estate owned (REO) properties. You may have to do some negotiating to get the best price possible.
5. Experiment with all three process. You may have to purchase foreclosures at all three stages to see which process or stage allows you to make the most money with the least amount of headaches. All of the processes have pros and cons. If you take your time and evaluate each process, you should be able to make a profit from the re-sale of these properties. No matter which stage you use, try to keep your expenses as low as possible.
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