There are three basic methods to invest in foreclosure real estate, depending on the stage of the foreclosure process: buying pre-foreclosures, buying at the foreclosure auction, and buying from a lender after the foreclosure sale.
The first method of investment, pre-foreclosure, may be accomplished through a short sale (a sale of real estate short of the amount needed to pay off the mortgage), which would involve both the homeowner and the lender holding a mortgage on the homeowners residence.
The second method is to purchase the property in the late stages of foreclosure by way of auction. In the timeline of a foreclosure case, once a lender receives judgment, the lender obtains permission from the court to hold a judicial sale of the real estate. Once a successful bid is placed on the real estate, the judge that ordered the sale must approve the bid before the investor can claim ownership of the property. This is often times a great method to “beat the market” by offering to purchase the real estate before it is turned over to a realtor to market the highest possible price for the lender. However, the investor must have his/her financing accessible before entering the auction market.
The third method, known as REO (real estate owned) purchases operate similar to a conventional real estate purchase in that the property is marketed by a realtor and the financing options favor the purchaser. This method is most often the safest of the three real estate investment methods noted above.
Often times, investors looking to diversify their portfolio find real estate investment to be a valuable mechanism to build wealth over long periods of time. Savvy investors look for opportunities in the foreclosure market by way of short sales, purchasing REO properties as well as purchasing foreclosed real estate at foreclosure auctions. The latter investments may reduce risk because in the foreclosure market, the idea is to purchase below market value. Thus, any given property purchased by way of foreclosure may be instantly marketable and come with an equity position.
Sweis Law Firm offers complete foreclosure investment services for the short sale investor, REO investor and the auction investor. No matter your business model, Sweis Law Firm can service your investment objectives with quality service that meets your investment objective and reduces your risk. Contact us now to learn more about the opportunities available to investors in the real estate market.