How To Buy Foreclosure

There are few different ways to acquire a distressed property depending on what stage of the foreclosure process you obtain the property in.  The three basic stages are pre-foreclosure, foreclosure, post-foreclosure.

Pre-foreclosure
In the pre-foreclosure stage the bank has already notified the homeowner  that the home loan is past due and they if payments aren’t brought current they will push forward with foreclosure proceedings.  If you are able to acquire a distressed property at this stage you will be saving the homeowner from having a foreclosure on their credit and you will also pick yourself up a pretty good deal.  Usually at this point the homeowner just wants to get out of the deal to save their credit and may sell for what they owe the bank.  The best place to get leads for these types of deals are accountants, real estate agents, and friends and associates.  You can also run a small classified in your local paper.

Foreclosure
The next phase is the foreclosure stage.  At this point the lender has filed a notice to foreclose and the information is recorded at the County clerk’s office.  The County Clerk’s office will be able to guide you to an index where the notices of default are filed.   At this day in age distressed properties have become so prominent that some offices will allow you to sign up via email for an advance notice of default list so that you may be notified weekly.  Title insurance companies can also provide recorded information on filings, usually they will do this in exchange for future business.
After the foreclosure has been filed it can still take some time before the distressed property is to be sold at the auction.  The time it takes mostly depends on whether the foreclosure is located in a judicial or non- judicial state.
In a judicial foreclosure state foreclosures tend to take much longer to complete.  These types of foreclosures pertain to the mortgage versus the deeds of trust.
In a non-judicial foreclosure the foreclosure pertains to a deed of trust.   This is handled by a third party trustee and is usually completed with 2 to 4 months after the borrower has defaulted on their payments.
Once the house completes the judicial or non-judicial process it is ready to be sold at auction to the highest bidder.
Post-Foreclosure
At the final phase, the lender has taken control of the distressed property.  After the auction is complete the property still lies with the lender or with a private investor.  If the property is in the hands of the lender then they are usually willing to negotiate a pretty good deal with anyone who is willing to take the property off their hands.  The lender is not in the business of buying homes back they are in the business of lending money.  A foreclosure on their books looks like a poor lending decision on their end, so they are usually willing to negotiate with you or investor to relieve them of the property.
If the homes is in the hands of an investor who purchased the home at auction you still may be able to negotiate somewhat however don’t expect the bargain you may have seen if you had purchased before it got to this point.
What To Do Next
Finding a foreclosure at any of these stages can be extremely profitable.  What you need to do is decide at which phase you would like to purchase your foreclosures and become an expert in that particular phase.  Doing this will allow you to experience the most success as an long-term investor of distressed properties.