| Are you looking for an investment opportunity in real | | | | well below market value. If the seller is under |
| estate? Foreclosures can be a tremendous | | | | bankruptcy, the bankruptcy trustee may claim that |
| opportunity for new investors. The profits can be | | | | the sale was a "fraudulent transfer" that was not |
| enormous. Foreclosure investing, however, does have | | | | fully valued to pay off creditors. This would force the |
| risks and one must be fully prepared before | | | | deed back into the bankruptcy estate. |
| beginning. | | | | |
| | | | | There are steps you can take, however, to mitigate |
| There are three basic ways to invest in foreclosure: | | | | these risks: |
| buying from the lender after foreclosure, buying | | | | |
| pre-foreclosures, and buying at foreclosure auction. | | | | Get an inspection |
| | | | | Use a knowledgeable escrow agent |
| Buying REOs | | | | Look at the property yourself |
| | | | | |
| When you buy from a lender after foreclosure, it is | | | | Buying at Auction |
| called buying REOs or real estate owned. REOs is the | | | | |
| least risky way to buy a foreclosure property. Buying | | | | Buying a foreclosure at auction is the riskiest way to |
| an REO can be very similar to regular real estate and | | | | purchase a property. At auction, you have almost no |
| are thus relatively safe. One possible risk is that you | | | | safeguards. For example, there you have no real |
| may not get a seller's disclosure. You can usually, | | | | estate agent, escrow, or title report. Moreover, you |
| however, sue the lender for restitution if something | | | | are not allowed to inspect the property and thus you |
| goes wrong. | | | | have no idea or warranty on its condition. In most |
| | | | | states, auctions are an all cash transaction that you |
| Buying Pre-Foreclosures | | | | must complete in a week to a month. |
| | | | | |
| Buying a pre-foreclosure property is somewhat riskier | | | | If the property is occupied, it may take months to |
| than buying REOs. For example, desperate sellers | | | | evict the tenants. Tenants may also vandalize or |
| may lie to you about the condition or the presence | | | | steal from the property before eviction. Also, the |
| of liens on the property. One should also pay close | | | | former owner may sue you to overturn the sale, |
| attention to whether the seller has entered | | | | particularly if you flipped the property for a nice |
| bankruptcy. If the seller is already in bankruptcy, the | | | | profit. |
| deed may not be valid unless it has gone through | | | | |
| bankruptcy court. Moreover, even if the seller files | | | | |
| bankruptcy after the sale, you may have to deed | | | | Buying a foreclosure can be rife with risk but also can |
| the property back to the seller up to three years | | | | have great rewards. You can minimize risk by fully |
| after the sale. Laws, however, vary from state to | | | | understanding the foreclosure process. |
| state. | | | | |
| | | | | For more information, visit GreatForeclosureListings. |
| Investors hope to purchase foreclosed properties | | | | |