| The buying of foreclosures is a potentially profitable | | | | some kind of deal that allows him to come out of the |
| method of Real Estate investment. The pros of buying | | | | situation without losing everything. The potential buyer |
| foreclosures in many cases outweigh the cons. | | | | will most likely be getting the property at considerably |
| A foreclosure is the term that is used when a | | | | under the market value. This creates an ideal situation |
| homeowner falls behind on his mortgage loan | | | | for flipping the property. |
| payments and the lender who holds the mortgage | | | | It is usually better to deal with the homeowner directly |
| takes legal action to recover the property. Although | | | | whenever possible, but foreclosures can almost be bid |
| there are other circumstances that might lead to a | | | | on at the public auction. The bids are usually sealed |
| foreclosure, falling behind at least two full monthly | | | | bids and the winning bidder will be expected to come |
| payments is the most common reason. There are | | | | up with the bid price quickly. The homeowner might |
| several laws that have been enacted in various states | | | | have to be actually evicted, but despite this, it is often |
| that protect the rights of the homeowner in the case | | | | worth making bids as the possibility of getting the |
| of foreclosures. | | | | property at a price way below market value is good. |
| However, if the homeowner is not able to make up | | | | Another method of purchasing foreclosures is called |
| the amount owed and foreclosure is initiated, he stands | | | | REO. This stands for Real Estate Owned properties. |
| to lose any equity he might have in the home. The | | | | These are properties that have not been sold at the |
| lender will eventually sell the property to another buyer | | | | auctions and are now owned by the lender. |
| in a public auction and the homeowner will be evicted. | | | | Lenders will be willing to unload the properties at a |
| This is, perhaps, the biggest advantage of buying a | | | | very reasonable price. They are mostly interested in |
| foreclosure property. The home owner is facing a | | | | recovering the loan balance or as much of it as |
| serious loss if he has any equity in the home at all. He | | | | possible. They are in the business of lending money, |
| is going to be very open to any type of deal that | | | | not managing Real Estate and will want to unload the |
| allows him to cut his losses as much as possible. | | | | property as quickly as possible. The pros of buying |
| It stands to reason that the home owner is not going | | | | foreclosures can be summed up by the fact that the |
| to be in a very sound financial position. If he were, he | | | | properties can be purchased by an investor at a price |
| would not have fallen behind in his payments in the first | | | | below market value. This is the perfect situation for a |
| place. This means that he is quite willing to negotiate | | | | buy low-sell high transaction. |