Before you get started with purchasing a foreclosed property, you
need to understand some basic foreclosure information. If you are a
first time homeowner and are looking for high profits foreclosure could
be a good option for you. In order to get a loan, foreclosed real estate
properties are those that are being utilized by borrowers of banks and
other financial institutions. If the borrower cannot pay the loan back
to the bank or financial institution, the bank or the lending
institution can foreclose the property, which was used as collateral.
This legal procedure takes place when any proprietor fails to repay
their loans and the loan provider issues a non-payment notice. When the
bank or your mortgage company needs to recover the debt, they opt for
the foreclosure method. There are two kinds of foreclosure � Strict
Foreclosure and Foreclosure by Sale. Through the strict foreclosure
method, the bank or the loan provider can directly absorb the
defaulter�s property as an alternative for the loan taken by you. Later,
in the presence of the responsible government officer, the property
becomes eligible for auction. At the time of auction, the bank puts
forward their offer in front of the potential buyers.
Foreclosure auctions are generally advertised in newspapers or are by
some notice. People dealing with real estates also get the list of
foreclosed properties, and they can bid their amounts for the property.
Usually, the foreclosed property is offered to the buyers at an amount
equal to what the erstwhile owner had borrowed from the loan provider.
The bidding amount comes lower than the exact value of that property.
The realtors then resale the same property at a higher price. When the
auction is over, the property goes to that person who offers the highest
amount, and he/she becomes the owner of that property.
It does not matter whether the original owner is present or not �
rather, the owner has no real claims over the property anymore. Usually,
companies dealing with mortgage loans are much more interested in
getting their credit back instead of foreclosing a property. The second
kind of foreclosure, that is, foreclosure by sale, means getting a
property at a lesser value than the actual market value. The homeowner
here grants your proposal to buy the property at a cheaper price for two
concrete reasons. Doing so helps them pay the due payments, and there is
a chance of getting some cash. Through this process, the original owner
finds a way out of bankruptcy and loan compulsion, and manages to get
back some element from his equity. The person who buys the property also
makes profit from this because s/he is getting the property at a price
much lower than the market value.
The possibility of getting a good profit on there properties is quite
high. The fact is that there are many foreclosed properties that need a
fair amount of cleaning and maintenance and fixing there are also
properties that are in quite a good condition and they do no need too
much of maintenance and repair. There are many foreclosed properties
that require little maintenance and repair and they are made livable if
a little bit of repairs are done in them. The banks and other financial
institutions keep the property and they sell them out at a good amount
of money for them. These real estate properties we are talking about are
available for sale and you can get a good deal out of them.
Foreclosure by sale assists you to get rid off your financial debts,
whereby you are handing over the property to the investor through a
contract. In fact, you, as a real estate investor, can make most out of
your investments by directing your finances towards purchasing
pre-foreclosure properties. Buying Foreclosures is one of the best home
business opportunities. The buying of the property in the
pre-foreclosure period is one of the best ways to go in for real estate
investing. The pre-foreclosures are a very well known niche market. The
novice investors try to do everything on their own. The most number of
motivated sellers is to be found in this period. One of the fundamentals
of dealing in foreclosure is the act of setting up contacts and speaking
only to the motivated sellers and keeping away from all the rest of
them. In foreclosure real estate investing there is the need for some
specialized facts. These factors make dealing in foreclosed properties a
good business to acquire from.
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