Understanding the Foreclosure Process
You’re ready to begin your first (or maybe fourteenth) flip. You have your investors lined up, you have your contractor picked out, but there’s only one problem…you don’t have a house.
But before you start putting in offers, it’s best if you completely understand the process of foreclosures. When should you be placing offers and when should you be waiting?
The foreclosure process differs from state to state, but the basis of the process goes a little something like this:
Why You Shouldn’t Buy During Auction
People tend to think that auctions are good deals because they’re “hidden gems,” but in reality you never know what you’re getting. If a property is being auctioned off, it’s because the owner had trouble making their payments. This could also mean that there are other liens against the home and the home could have maintenance issues. Some auction properties do not allow home inspection or require you to buy site unseen. This is a huge risk, especially for those just starting out.
So At What Stage Should You Buy a Foreclosure?
Real estate owned properties (or better known as REOs), is the safest time to buy during foreclosures. When you purchase a REO, you will deal directly with the bank. Homeowners can sometimes cause an issue when dealing with foreclosures. The bank has no emotional attachment to the home; their main concern is to get the house sold.
Because the banks are trying to lure in buyers, any outstanding taxes are usually waived. You also have the option for a home inspection, that way you know exactly what you’re getting yourself into.
Pre-foreclosures are also a great time to buy. These deals are still owned by the home owners and may sometimes be easier to deal with than the bank. You’re helping someone out of a sticky situation, but you’re also getting a great deal.