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Understanding Foreclosures
Is a foreclosure a good real estate investment?
Foreclosure properties represent an exciting way to buy real estate because they can be purchased at discount prices, typically 10% to 50% below market value. These discount prices are possible because the property owners, which can be either the lender or government agency are motivated to sell them very quickly, often at below market prices.
How does the foreclosure process work?
* A buyer purchases a home and gives a Mortgage to a bank. The home is used to secure the loan, if the borrower doesn't make the agreed to payments the bank can take the home away through the foreclosure process.
* If the buyer gets behind on payments or stops making them altogether, the lender can demand payment in full and begin the foreclosure process any time they want to.
* If the buyer cannot make the payments or the lender will not accept anything less than what is owed right now, the foreclosure process begins, and the home owner does have the option of selling the home and using the proceeds to pay off the mortgage. In some cases the bank may accept less than what is owed on the property and allow what is called a "short sale"
* If the lender starts the foreclosure process a notice of a sheriffs auction is published to the public once a week for six weeks.
* The sheriff’s auction is held. The property is sold or maybe not. The home owner does not have to leave the property because there is still another step.
* The statutory redemption period begins after the auction, it can be as short as five weeks if the owner abandons the property. In most cases the redemption period is six months long, if the owner has a great deal of equity in the property it is 12 months long. During the redemption period the owner can pay everything they owe and all the costs associated with the auction and keep the home. They can also sell the home during this period and pay off the mortgage.
* After the 6 or 12 month redemption period ends, the home owner has to leave the property.
Why do people end up in foreclosure?
Some of the most common reasons that homeowners default on loan payments and end up in a foreclosure situation are being laid off, fired or quitting a job, inability to continue working due to a medical condition, excessive debt and mounting bill obligations, divorce, an out of state job transfer or death of a spouse or co-owner.
Can people make money investing in foreclosures?
Absolutely! Buying properties at discount prices is the surest and quickest way to make money in real estate. Individuals who are looking for homes can get a significant amount of equity up front with foreclosures. Of course, there are no guarantees, but investors looking for short-term income may be able to flip foreclosure properties for big profits. Landlords may be able to buy and rent foreclosures, with a positive cash flow, for long term wealth accumulation.
Let The Johnson & Murphy Real Estate Team show you these great deals!
Weekly we will put together a list of foreclosures in your desired area for your review, all for FREE and with no obligation. Plus we will also share with you other homes that might peek your interest, this way you are not limited to what is currently being offered. Fill out the form below and we will get you your first Free Report right away! If you have any questions, always feel free to call or e-mail us anytime. We are always happy to help in anyway we can. | 
