How to Make Money Buying Foreclosed Homes
If the American dream is owning your own home, then the American nightmare
must be facing foreclosure. With many risky mortgage loans (interest only mortgages,
adjustable-rate .. etc) easily available, buyers are able to purchase a
more expensive house than they can afford. Unfortunately, it will be devastating to many
home buyers when these crazy mortgage loans are converted into higher interest
loans or fixed rate loans eventually. As a result, we are seeing a rising trend of
foreclosure in the US.
Besides losing a major investment, the person facing foreclosure is also faced
with a blot on their credit record that could take years to repair. Being faced
with losing one's home is one of the most stressful situations that anyone can encounter.
It's an unfortunate fact that another's misfortune often presents opportunity for
profit to the canny investor.
A survey released in early 2005 by 'The National Association of Realtors' in Washington,
DC showed that over 20 percent of all residential real estate transaction in the US went
to real estate investor rather than home buyers. Buying a house under notice of
foreclosure is one of the best ways for investor to acquire property for below market value
and turn it around into a profitable asset. If that feels a little ghoulish,
it may help to know that by buying a house from the owner at certain stages
during the foreclosure, you can help them prevent the foreclosure and minimize
the impact on their credit rating.
In order to make the most profit from investing
in foreclosure properties, it helps to understand the stages of foreclosure, and
the possibilities for profit inherent in each one.
The first step in the foreclosure process is a filing of notice of
intent to accelerate foreclosure. The period of time that the mortgagor has to
respond varies from state to state from a few weeks to a few months. During this time,
lenders are often open to negotiation for repayment of the loan to bring it current
or otherwise pay off the defaulted amount. One of the more popular ways of doing this
is for the owner to find a buyer for the house who will pay off the defaulted amount
and satisfy the requirements to stop the foreclosure.
Notices of foreclosure and sale are a matter of public record. A little
research at the city courthouse will get you a list of homes that are
in the first stages of foreclosure. You can often work out a sale with
an owner who would prefer to sell house fast for enough cash to satisfy the mortgagor.
If the owner of the property fails to redeem the foreclosure by paying
an agreed upon amount, or making arrangements to do so, the property
proceeds to a foreclosure sale. Foreclosure sales must be publicly announced and certain
regulations adhered to. Depending on the local ordinances, there may be a requirement
for a minimum bid, and there is nearly always a requirement that the winning bid must
be paid in cashiers' check at the closing of the auction. The sale is by auction, and
there is a requirement that the highest bid be accepted - even if that bid is from the
The city clerk's office and your local newspaper are the two best sources of information
on upcoming foreclosure sales.
Less common but not unheard of are sales of properties deemed to be
abandoned. These are generally held by municipalities and towns in an
attempt to recover back taxes owed on a property. A thorough title search will reveal
if there are any liens or other debts outstanding against a property. A tax foreclosure
sale can be one of the most profitable for a real estate investor if there are no other
outstanding liens against a property.
Getting the foreclosure list is the most important step in this real
estate investment opportunity.
There are many online services that provide huge foreclosure property listings
with over 50,000 listing updated daily. You can get instant access to
this large foreclosure database to find the most up-to-date bargain.
Start your free trial now!.