Buying foreclosed homes

Both individual buyers and real estate investing companies with large portfolios are interested in buying foreclosures because of their significant discounts. Foreclosed homes are an opportunity for people who cannot afford to buy a house otherwise, because of the prices on the real estate market. Instead of giving in and settling for much less, many of them discover foreclosure lists and the foreclosure market. Any effort invested in the search for foreclosures will be rewarded, due to the low purchase costs and to the comforting feeling of succeeding to buy the home of your dreams.

If a homeowner secures a loan with his property and fails to pay for several consecutive moths, he has his home taken by the lender and listed among other foreclosed homes. Usually, foreclosure properties are included in foreclosure lists if the owner misses more than two monthly payments and they first appear on these listings as pre-foreclosures. During this early phase, they are real investment opportunities, because you can get better prices if you deal directly with the owner. Even if the houses are not in an excellent shape, the price is lower than average and you can do the repairs and the improvements along the way.

If the homeowner does not contact the lender after two payment requests, the lender will usually make a demand for full payment, which is stipulated in the mortgage under the acceleration clause. Now the homeowner owes the balance of the mortgage plus all the late payments, legal fees and late fee penalties. If he doesn’t make all these payments, the foreclosure process begins and the property appears in foreclosure lists as one of the foreclosed homes. A certified letter of foreclosure is served to the owner by a processor or by the local sheriff and an auction date is set. Anyone who has a deposit check for the stipulated minimum can participate to the auction.

All types of lenders (credit unions, banks, private lenders) are motivated to sell their foreclosures as soon as possible because they want to improve their liquidity ratios and to get rid of their nonperforming loans. Bank foreclosures are very popular because people usually consider banks to be more reliable institutions and because there are no title issues and back taxes involved and no tenants to evict. Foreclosed homes are usually sold at a more than reasonable price, always below their market value, because banks are eager to recover the loaned money and are open to discuss the provisions of the contract and to negotiate the price. If you know how to deal with them, you can get low interest rates or a low down payment. This is why bank foreclosures are considered one of the safest investments and never fail to attract potential investors, who are sure to make a profit by reselling the houses later on.

After you have decided to go for foreclosed homes, you should immediately subscribe to some of the foreclosure lists available online. A proper list includes information about the properties and contact details of lenders and owners. The property description should include the home’s square footage, number of bedrooms, bathrooms, condition, sale price, additional features. A number of web sites offer a few day trial memberships, so you should try them and decide which one offers the most updated listings. You will also find foreclosure lists offered for free, but they will not provide you with a high degree of reliability. Everything comes with a price, so if you don’t want to get an outdated list, you’ll have to pay a subscription fee. The effort of carefully searching foreclosure lists and choosing attractive foreclosed homes may take you some time, but in the end it proves to be worthwhile. You can shop from your room without leaving your computer and you can find houses for as little as $10,000.