Buying foreclosures is a risky business. It takes a lot of training, education, and experience (some of which are literally costly) to be remotely good at foreclosure investing. Thats why there are only a few investors who venture into this market. There are a lot of factors to be considered and the risks are just too high, especially for newbie investors.
However,
buying foreclosures can also be a highly lucrative business. There is less competition in this business, so you have lots of opportunities to find and close deals. All you need is a deeper understanding of the foreclosure process and some education and experience to become a full-fledged foreclosure investor.
There are basically three types of foreclosures: pre-foreclosure, foreclosure, and post-foreclosure.
Pre-Foreclosures
In the pre-foreclosure stage, the investor buys the property directly from the homeowner. While the homeowner has already received a Notice of Default from the bank, putting his property in the foreclosure process, the lender has not placed the house up for auction. In this stage, the lender is not involved in the process of transferring ownership of the property from one owner to another.
You need to be cautious, patient, and sensitive when buying a house in the pre-foreclosure stage. The homeowner is likely to be in a state of financial and emotional stress, and most of them are not really keen on selling their property. The trick here is to show to the homeowners that you can provide solutions to their problems.
Foreclosure Stage
In the foreclosure stage, the lender has already put up the property for auction. The homeowner has until the foreclosure auction to sell the property in a process known as a short sale. The foreclosure crisis has led to an increase in short sale investors as more and more homeowners seek a way of out their properties to avoid foreclosing on the mortgage.
Just like in the pre-foreclosure stage, you have to be patient and sensitive when trying to buy foreclosure houses as most homeowners are in financial and emotional stress. Mastering the art of
short sale investing, however, has proven to be a very profitable business thats why many investors are trying their luck in this form of real estate investing.
Post-Foreclosure
In the post-foreclosure stage, the bank has taken ownership of the house, which is now known as a real estate owned (REO) property. In this stage, you will have to negotiate with the bank to buy the property. And just like short sales, the foreclosure crisis has resulted in an increase in the number of bank owned homes across the country. This opened a great opportunity for REO investing, which is fast becoming popular among real estate investors today.
Buying foreclosures is a complicated but highly lucrative business venture. Learn how you can become an expert in foreclosure investing by visiting
www.REIWired.com today.
