USA Foreclosure Auctions

Tips For Getting Great Deals on Foreclosure Properties

The first step to making investments on foreclosure properties is to understand the basics of the foreclosure process (even before you think about finding any listings of foreclosure properties or attending a foreclosure sale or foreclosure auction).  The process of foreclosures happen when a homeowner misses some payments on his loan and as a result the loan goes into default.  When the notice of foreclosure is filed by the bank or the lender, what occurs next is a grace period called the pre foreclosure period.  During this time and subsequent steps of the foreclosure process, there are investment opportunities.

There are mainly three types of foreclosure sales and foreclosure properties.  Each has distinct features, and knowing their details as well as their benefits or disadvantages will help you to choose the best option for yourself.  The three types are:

-Pre-foreclosure sale in which investors approach distressed homeowners to rescue them from receiving a black mark of a foreclosure on their credit report by taking over the property and the loan.  The investor generally puts some cash into the pocket of the homeowner and can get a great deal with these pre-foreclosure sales.  The main drawback for pre foreclosure sales is that there are emotional tolls and challenges with approaching distressed homeowners directly to discuss these deals.

A pre foreclosure sale opportunities occur when a homeowner has taken out a loan, misses some loan payments, and is facing a foreclosure. Whether the homeowner is just behind on his payments or has had a default notice filed against him and is the grace period of preforeclosure, these homeowners can be highly motivated sellers.  The key with finding pre foreclosure properties is advertising, finding distressed borrowers, and approaching them.  Public notices are required to be filed also for pending foreclosures so you can use that as another source of leads to approach distressed homeowners to make a pre foreclosure sale.

Pre forelosure sales are a win-win situation for both parties; the buyer gets a great deal on a foreclosure property at a discount without going to a foreclosure auction, and the homeowners gets some cash in his pocket with no black marks on his credit report for a bankruptcy or foreclosure.  In some cases, you may approach and work with lenders of loans facing defaults since these lenders are always looking to avoid the costly and hassle filled process of foreclosures and recovering money for their defaulted loan.

Pre-foreclosures give perhaps the best chance for a savvy investor to make lucrative purchases and get the most value for investment money.  The main objection that most investors have with pre foreclosure transactions is that they must approach distressed homeowners directly rather than deal with foreclosure auctions or banking institutions for foreclosure properties or REO bank owned properties.  If you can handle the emotional toll of negotiating with a distressed homeowner facing a tough situation, pre foreclosure purchases can be a great opportunity for you.

-Foreclosure Properties in Foreclosure Auctions where investors obtain listings and bid in auctions on foreclosure properties.  These are probably the most traditional investment vehicle with foreclosure properties for investors and offer great chances at getting great value for the money.  Foreclosure sales and foreclosure auctions come and go fast with limited windows to inspect properties, so investors will have to stay on top of the process.  Investors may wish to get advice and expertise of real estate agents, general contractors, or tax experts along the way.

Foreclosure sales usually at a foreclosure auction occurs after a loan has gone into default and passed through the preforeclosure grace period.  At this point, the auction is available for sale either through a public foreclosure auction or sell through certain sellers and brokers.  The thing to pay attention to for foreclosure properties is to make sure to assess its condition, neighborhood, and check for secondary liens beforehand since you must have done all these before the foreclosure auction.  Be sure to pay particular attention to the open house dates or inspection times for each foreclosure property that you are interested in for the listings of properties.  Foreclosure listings and foreclosure auctions come and go quickly so you must be prepared to act fast.  Securing financing or pre-approval for a loan prior to the foreclosure auction can help facilitate the sale and deed transfer process of the foreclosure property.

The main advantage of buying foreclosure properties through foreclosure auctions is a great way to get value for your dollar.  Plus, you do not have to deal directly with distressed homeowners personally as in pre-foreclosure transactions.  The toughest thing about foreclosure properties and foreclosure auctions is that they come and go very quickly, with limited windows of time for you check out and assess the condition of the house.  Purchasing foreclosure properties also require large sums of cash at one point or some form of financing pre-approval so this limits who is able to participate in these possibly lucrative investments.

-Bank Owned or REO Properties where the bank has taken over the property.  This happens when the foreclosure property has gone through pre-foreclosure and failed to sell at the foreclosure sale or foreclosure auction.  Banks and lending institution generally are motivated sellers willing to work with investors, although the chances to great an amazing deal with these types are more rare than the previous two types.

After a property has gone into foreclosure, and after it has failed to sell at the foreclosure auction or foreclosure sale, the bank or lender will take control of the property, and at this point the foreclosure property is classified as a bank-owned or real estate owned (REO) property.  It becomes the responsibility of someone at the bank or financial company to sell the property and recover as much money for the lender as they can.  They can handle this foreclosure property by working with a buyer directly or by listing it with real estate agencies, whatever their preference.  A savvy and well connected real estate investor can actually get access and make offers on certain REO properties before others even have a chance to know about it.

The best thing about bank-owned or REO properties is that the banks or lending institutions are motivated sellers looking to recover their money.  Possible problems with bank-owned or REO properties is that in general, investors cannot get as good of a deal with buying REO properties as they can with pre foreclosure sales or foreclosure auctions.  Also, if the person assigned to handle the particle bank-owned property only intends to list it with select real estate brokers or agents, you may have trouble getting access to see or even bid on an REO property that you are interested in.

There are many tips and steps you should take to find and invest in foreclosure properties.  First involves finding lists of foreclosure properties, then checking out and assessing the conditions of the properties quickly.  Getting the help and advice of real estate brokers or agents as well as getting pre approval for financing may facilitate the foreclosure sale process.

Get informed, don't rush, and make smart decisions.  Talk with friends or family who may have experience in these matters of foreclosure investments or foreclosure auctions.  These investment opportunities come and go quickly so you have to act timely to get these foreclosure properties.  Sometimes, though, it is wiser to miss out on an opportunity rather than make a fatal or disastrous purchase without doing your homework ahead of time.