ForeclosureWise
Be Wise In Your Real Estate Investments
You've found a property now what?
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Foreclosures: The Basics
What is a foreclosure? Most people look at the foreclosure process in basically two ways. The first is as a homeowner who for some reason is not able to make their mortgage payments and as a result loses their property to foreclosure. The second is as an opportunity to find a home at a discount or make some money purchasing foreclosed properties. Some have found that making money investing in foreclosure real estate can be relatively easy while others find that they end up losing more money than they make. In order to invest in foreclosure real estate it is helpful to understand the process and at which stage you can obtain property at significant discounts.
The foreclosure process varies from state to state and area to area. It typically starts when a purchaser becomes delinquent on their mortgage payments. The mortgage or deed of trust documents state in detail exactly what will happen when a debtor is behind on their payments. The property owner is given written notice of the delinquency. If the payments are not made current the auctioneer or trustee advertises the auction in a local newspaper. This also gives notice to any junior lien holders who might have an interest in the foreclosure proceedings.
At the auction you would register with the auctioneer or trustee. In many cases if the auction is being held at the property there will be an opportunity for an walk through inspection. The trustee or auctioneer will make sure that you have a check for the required deposit and at the appointed time the auction will begin. Some auctions termed "absolute auctions," don't have a minimum bid; however, in most cases a representative of the mortgage holder will make a bid at what they are owned. You will be able to tell quickly if there is a great deal of interest in the property because there will be multiple bidders. Some will wait for this frenzy to calm down before they make a bid. It is imperative however that you determine before the auction what you are willing to spend. It is very easy to get caught up in the bidding frenzy. If that happens you might have bought a property for more then its worth.
If you are the successful bidder there is usually a court action required for you to take title to the property. You will be given a specified period of time to come up with the remainder of the bid price, which is why it is crucial to have your financing arranged ahead of the auction. Most of these houses are not able to be financed using conventional means, so it is sometimes necessary to use other means such as equity lines on a currently owned property or private financing. If all goes well you will settle on the property and begin to fulfill you real estate goals.