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Foreclosures Central

With the surge in foreclosures across the country, we thought we'd put together a section on our site to focus on just foreclosures.

There are various types of foreclosures, or stages of foreclosure. There's the period where a property owner is on the verge of foreclosure (pre-foreclosure), the actual foreclosure and bidding of the property at the courthouse steps, or the purchase of the foreclosed property when the lender has taken back the property, at the real estate owned (REO) stage. Each stage has advantages and disadvantages for the investor.

If you buy at the pre-foreclosure stage than you can see the property, negotiate directly with the owner, but often you’re forced to wait for long periods of time for the lender to approve the sale, and event then there’s the risk that owner might go into bankruptcy.

If you buy a property during foreclosure, bid on the property at the courthouse, you must have a cashiers check, don't often get to see the property, and must compete with other bidders. This is a stage that requires a fair amount of experience in the bidding process and in taking on more risk—since you’ll need to know if there are other liens on the property by getting the title of the property.

If you buy a property after it's foreclosed, an REO, all the liens will have been removed, or are now the lenders’ responsibility, and you can now negotiate with the lender on price since they're not real estate owners but money lenders. The banks or lenders don't want to manage the day to day process of owning property--they want to get rid of the listed REO from their books and get back to mortgages. They don’t want to manage property.

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