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What many don’t know is that there are 3 steps in the foreclosure process and if you are considering purchasing one of these homes the prices vary upon which stage of the process the home is in. The 3 steps in foreclosures are, pre foreclosure, foreclosure, and post foreclosure. Pre-Foreclosures A home classified in a pre-foreclosure stage implies that only couples of missed mortgage payments have occurred and the lender hasn’t gotten involved. If you are facing this situation, you still have time to avoid foreclosure. The best potential place to find distressed properties are with realtors, attorney’s, business associates and even sometimes while driving on the side of the road. Investors are out there looking for bargains with distressed properties. When buying a pre foreclosed home, reaching a mutually agreed upon price, and dealing directly with owners, is the only way to go. When an agreement is reached, it’s beneficial to both parties. The seller will be able to repair the damage to his/her credit. The buyer is able to purchase a house at a reduced price and saves the agony of an irate owner, who has lost his entire life savings, and is losing his personal residence, will usually end up destroying the home before turning it over to the bank. Foreclosure Stage In the next step, when a property is at the foreclosure stage, it can be identified through the County Clerk's office. Find out where the notices of default are filed and determine how to sort through the general index to discover pending foreclosure sales. Some County Clerk’s offices display these results on their webpage. You may also be able to request that your address or e-mail address be placed on an advance notice list or a list of pending defaults. Title Insurance companies may also be of assistance in this area by providing recorded information in exchange for the expectation of future business. The foreclosure process itself will vary from one state to the next, depending on whether it is a title or lien state, which determines whether a judicial or non judicial form of foreclosure is involved. Judicial foreclosures pertain to mortgages, rather than deeds of trusts and take significantly longer to complete. Non judicial foreclosures pertain to deeds of trust where a third party, called a trustee, handles the entire process in a matter of two to four months after a borrower has defaulted and stopped making payments. Once the property passes through either the judicial or non judicial phase, it is then ready to be sold at auction to the highest bidder. Post-Foreclosure This is the final step in the foreclosure process .By now the lender has already taken control of the property. The home is either in the possession of the lender’s Real Estate Owned department, or was sold during an auction to either an investor or a new owner. Refer to the foreclosure notice to determine the name of the lender as well as the balance owed on the mortgage. Lenders are typically extremely willing sellers, because an REO on the books is an obvious sign of having made a poor lending decision. Both the overhead and losses involved with an Real Estate Owned negatively impacts the bank because of the added reserves a lender must maintain as well as any potential property management fees incurred. In today’s market banks are willing to negotiate. If the property ends up in the hands of a private investor, rather than with the lender, you may still be able to write a contract offer either on your own or with the help of a real estate agent. However, the price at this point may not be rock bottom. If you’re an investor, A strategic and key decision needs to be made concerning where to enter into the foreclosure process. It is critical that you identify one of the three aforementioned stages and become an expert in that particular process, which will help you to achieve the most success at becoming a long-term investor of distressed properties.
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