Facing Foreclosure


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Locating Foreclosure Bargains

Purchasing a foreclosed property presents the opportunity to pay much less than you would typically pay on a comparable property. If you are an investor this means that you can often invest the money you have saved in making improvements in the property and then resell it at a future date and pocket the profit.

While buying a foreclosed property can certainly provide many advantages, there are also some disadvantages and risk that are associated with such a move as well. In order to purchase a property at auction you must make sure that you have sufficient funds at the time of the auction, either through a cashier's check or cash up to 10% of the purchase price. Within thirty days you must be able to make arrangements for financing in order to complete the purchase of the property or you run the risk of losing the property and the deposit. You must also accept the fact that you will be purchasing the property as is, which means that you usually will not have the opportunity to make an inspection. As you will have no idea of the condition of the interior of the property, it is imperative that you make sure that you pay a low enough price to ensure that you will be able to make necessary repairs or improvements and still make a profit when you resell the property later.

Purchasing a property during pre-foreclosure as opposed to during an auction presents two critical advantages to the investor. First, if you purchase the property from the homeowner prior to foreclosure there is a good chance that you will be able to nab it at a good price. Many homeowners in this situation are quite willing to sell the property for just what they owe on it in order to avoid having a foreclosure appear on their credit record. Second, you have the opportunity to actually view the interior of the property before you purchase it and know exactly what you are purchasing.

Buying a property in pre-foreclosure is actually quite a bit like purchasing a property under normal circumstances. You negotiate a purchase price with the homeowner, sign a purchase contract and then finalize the transaction. The main difference between the two situations is that rather than the homeowner listing the home of sale with a real estate agent, you will instead be looking to locate prospective homeowners to contact in an attempt to purchase their home before they go into actual foreclosure.

You can locate homeowners who are in the first stages of foreclosure by researching public notices. This can be done at the county clerk's office as well as by reviewing the local newspaper where public notices will be listed by the attorneys of banks handling foreclosures. With just a bit of research you may locate a homeowner who is in the early stages of foreclosure and who will be willing to sell their property in order to avoid the full foreclosure process. There are many reasons why a homeowner may find themselves in this type of situation and it is important for you to understand those reasons so you can understand the motivation of the homeowner.

One of the most common situations is a separation in a marriage. This can be a more difficult situation in which to negotiate a sale during pre-foreclosure because the other spouse may be absent and not available or willing to sign the papers to transfer the property. Another common situation involves the failure of a business. This is often a good situation in which to negotiate because the individual may be more willing to sell the property rather than endure the embarrassment of a foreclosure. In some instances foreclosures occur because the homeowner simply could not make the payments and have found themselves in a financial bind. If you are able to offer them a way out of the situation where they do not have to face a foreclosure appearing on their credit, they may be willing to negotiate with you in order to get out of a bad situation.

The advantages to purchasing foreclosed properties can be tremendous, including huge savings and the potential to turn a profit if you are a real estate investor. The key is making sure that you do diligent research ahead of time and also understand the risks that you may be taking in exchange for the opportunity to save a significant amount of money on your next property purchase.



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