Overview of Finding Foreclosures

I've been in the Real Estate industry for over 20 years now. I'm here to help people understand that their is a way to make extra income even in today's economy.

Real Estate is an excellent investment, it follows a cycle. Owners & occupants stay put but speculators buy and sell. Exit strategies are important before you buy, decide on one buy and sell, then buy and hold. Foreclosures are the highest its been in years. You make your money when you buy. Identify which phase of the foreclosure market you want to work. Decide how you will find foreclosures. Identify at least two exit strategies.

Foreclosures have been around forever, only now there are more than ever before. In 2004, the number of foreclosures was 2% of properties closed in the U.S. In the First Quarter of 2008, the number of foreclosures accounted for 30% of properties closed in the U. S. If you're going to be successful in Real Estate you're going to need to work with a motivated seller and their aren't anymore motivated sellers that are going to lose their homes because they aren't making the payments. Foreclosures are a result of the ARM's (Adjustable Rate Loans) being reset from a low interest rate to an higher rate making the payment higher and perhaps unfordable for the homeowner and the property values dropping leaving no equity. Foreclosures are divided into 3 phases: The first phase is the pre-foreclosure and thats when the homeowner is still in control and if they have any equity that means you can work directly with the homeowner. However, if there is no equity then you would want to do a short sale.

The second phase is the auction this phase is usually reserved for the experienced investor because of the financing, property inspection, and the attached liens. The third phase is what we call the REO ( stands for Real Estate Owned) This is where the property hasn't been sold at the auction and the lender gets it back this is the safest way to buy a foreclosure because all the encumbrances have been removed and you can inspect the property before you buy. Not all foreclosures are a good deal so its important that you act like a real estate detective and get all the facts about the property before you buy. Its really all about the numbers it seems fairly simple but it really isn't when I say its all about the numbers I mean the number of properties, amount of research, cost and expenses versus the potential profits, and the number of offers that you make. Depending if you're in a Deed State or a Mortgage State the foreclosure process can take anywhere for 21 days to 120 days or longer. If you're in a state that has a shorter time frame to do your homework you need to find the most efficient way and fastest way to make a decision about each property that you're interested in.

So remember that a foreclosure is an opportunity to find a good deal. It is not always a good deal and in today's market there are some homeowners that are being evicted from their homes and they are leaving the property in a complete disrepair. So if you're looking at a property that you're aren't able to get inside and see the property you might be buying a property that will easily cost you more to fix it up than its worth. Well people say why invest in foreclosures? Simply foreclosures are at an all time high which presents an outstanding opportunity, high instant profit margin for the well trained investor and you can buy for a steep discount in many cases. The future trend for finding good deals is up because borrowers are defaulting on their sub prime loans, ARM's are resetting to higher percentages, falling property values, balloon notes are coming due, unstable money markets and security markets causing financial losses, and uncertain economy which leads to lay offs. Foreclosures are a fact of life anytime a debtor breaches an obligation of a security document the lender has the right to foreclose on the property.

There are some situations when you can catch property before it has gone on the auction block. This time period is called Pre-Foreclosure the property is in default and likely the mortgage payments are several months behind. The property owner may have no means of curing the default yet the clock is ticking towards the time the auction will take place and everything will be lost. Now given that a foreclosure on a person's credit record is the single most devastating item preventing any future borrowing for years to come. A homeowner in pre-foreclosure should be very eager and happy to work with you.

A fundamental key to making profit in the foreclosure market is understanding why the property went into foreclosure? perhaps the owner had a temporary cash shortage and you may be able to help them and take an equity position in the property in return for helping the situation. Or the owner may be financial devastated and just wants to dump the property before their personal credit is destroyed. There are many sources to aid you in finding foreclosures they are classified section, legal newspapers, attorneys, FSBO, realtor's, auction companies, IRS auctions, bankruptcies, probate court, and county courthouse/ Registrar of Deeds.