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Real Estate Foreclosure – Learn To Tell The Difference Between A Real Sweet Deal And A Really Bad One.To the novice real estate investor foreclosures often look irresistibly attractive. Who wouldn't want to make a quick profit of 50% or more? But whether a real estate foreclosure deal is really as sweet as it seems depends on several factors. To begin with, foreclosure is a legal procedure in which a mortgage holder reclaims a property due to default on a loan. Some states in the U.S. allow 'strict' foreclosure whereby the borrower has a certain period to make the debt current, after which the title reverts to the lender. Also keep in mind that, in some foreclosure proceedings borrowers have the 'right of redemption'. This allows them a certain period in which to 'cure the loan'. This means that they have a chance to make back payments, shore up credit and so on to reclaim title to and possession of the property. Once the real estate foreclosure process is complete, or at least inevitable, you can put in action a plan to acquire the property. Look for deals in which, at minimum, a Notice of Default has been issued. Auctions on foreclosed property are common but tricky. You should never ever put a bid on a blind piece of property. There's no substitute for first hand knowledge of the physical condition and legal status of a property. This is important because real estate foreclosure deals are sold ‘as is'. This means that unlike other property sales, no warranties are provided and no title insurance granted. If you do want to get into real estate foreclosure, you will at least need to have a professional inspection performed on the property that you're interested in. The property needn't be free of every tiny defect, but you'll want to know that the roof doesn't need to be replaced, that the plumbing is sound, there are no serious foundation cracks, or potential for flooding and so on. If any of those are present, they can be acceptable if you're looking for a place to fix- up and have the time and funds. In real estate foreclosure deals, you will eventually you'll hear about someone entering a 'short sale' deal. This occurs when a lender is willing to accept less money for a property than is outstanding on the loan. Another type of foreclosure opportunity is the REO — real estate owned (by the lender). These are properties auctioned but not bought. It's possible to get some very good deals, but exercise extreme caution when getting involved. Remember to do your research. Get a thorough inspection and perform adequate title research. Any major defects or encumbrances in the form of tax or other liens has to be a large factor in your plans.
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