> INVESTORS / BUYERS
> FORECLOSURE PROPERTIES
foreclosure happens when an owner defaults on the mortgage payments
for a property. Property in foreclosure is often referred to as
distressed property because the owner is in financial distress and
has usually missed several mortgage payments. The owner's financial
distress can be caused by a variety of unfortunate circumstances,
but it often results in a potential bargain buying opportunity for
an interested buyer or investor.
process doesn't just happen overnight. A typical foreclosure timeline
can extend more than three months. The different stages of foreclosure
offer different types of opportunities for the buyer.
Buying a property in pre-foreclosure involves approaching the owner
in default with an opportunity to escape the situation free of mortgage
debt and without a foreclosure on his or her credit history. For
the buyer, pre-foreclosures offer potential discounts of 20 to 40
percent below market value, but still give the opportunity to research
the title and condition of the foreclosed property.
Sale: If the default is not resolved by the end of the pre-foreclosure
period, buyers can attend a public auction scheduled by a trustee
that is working on behalf of the lender. Buyers are typically required
to pay in cash and may not have much notice to research the foreclosed
property beforehand; however, a house foreclosure sale often offers
some of the best bargains, sometimes as much as 35 to 50 percent
below market value.
REO (Real Estate
Owned by the Lender): Sometimes the lender will buy back the property
and resell it if it thinks that is the best way to recover any losses
on the property. The lender will probably make sure the title is
clear for any buyer, but the potential bargain is typically less
than buying pre-foreclosures or at house foreclosure sales.
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