Investing in Foreclosure Properties

Can you get a good deal buying at the foreclosure auction?
The foreclosure market is exploding. More than four million properties were foreclosed upon in 2008 and 2009 with little to no drop off in 2010. Banks need to find buyers of these properties before, during, and after the auction or they risk becoming crippled by a massive REO inventory that overwhelmes them. An effect of this is that banks have been “specifying” their opening bids or reducing the opening bid to an amount less than they are actually owed. Many times the opening bid is reduced by the lender by 50-60+ percent.

What type of properties can I expect to find at the foreclosure auction?
Many people wrongly assume that because a home is in foreclosure it is probably run down or in disrepair. You will find properties like that at the foreclosure auction but just as likely is a home in very good condition. Many were built during the recent real estate boom of 2004-2007 and often need little to no repairs.

What do I need to know when a property goes to auction?
Up to 85 percent of scheduled foreclosure auction sales are are postponed at least once and many are postponed several times before eventually being sold at auction, so it is very important to know not only what properties are going up for auction, but when.

Is knowing how to evaluate property important?
Yes. Many lenders are eager to sell and are lowering their opening bids, so you need to know if a property is a good buy. Just because a lender has slashed their opening bid does not guarantee that property is a bargain. Understanding the local markets and property values or working with a professional you trust in that regard is critical to buying sucessfully.

Do you have to pay the entire high bid amount right away?
Yes, in Washington State all prospective bidders must qualify or show proof of funds, usually cashier’s checks, for the highest amount they are willing to bid for the property before they will be allowed to bid.

What if I don’t have that much cash available to me?
There are companies that provide foreclosure auction financing to qualified persons who wish to bid at the foreclosure auction. Usually the borrower needs to have at least 10-20% of the purchase price in order to qualify for auction financing.

What else do I need to know?
Understanding the liens and encumbrances recorded against a property is critical to making sound decisions. Title reviews are another important factor in a successful bidding strategy because senior liens stay with the property. It is imperative that buyers understand the effect that IRS, Mechanics, or Child Support liens may also have on the title to a property. If you are not comfortable with your understanding of these areas make sure you seek professional guidance before bidding on a property.

Do I need a foreclosure expert?
A foreclosure expert has the tools and experience to find the best properties and steer you clear of properties with potential problems. Professional Foreclosure Consultants also will help you get qualified for auction financing, bid on your behalf, and assist you in evaluating and valuing the property.

Tracking Foreclosures

What is tracking?
Tracking generally means following a foreclosure from the moment a "notice of default" or foreclosure notice is filed at the county recorder’s office until the property is no longer available. Many details change as the property goes through the foreclosure process. It is important to have the properties' current status to help you determine your interest in pursuing the property.

Why is tracking important?
The sheer volume of properties in foreclosure makes it impossible for an individual person or investor to keep track of the information for each property. Gathering all of the data and then tracking all of the status changes, postponements, cancellations, opening bids, etc., from more than 30 different sources and then doing that for several hundred properties a week is a daunting task. If you did manage to compile all that information you wouldn’t have any time left to drive any of the homes. That is why a site like foreclosureplatform.com is so beneficial. We compile and track all of that data for you. You don't want to miss bidding on the best properties because the auction date changed and you didn't know about it or spend valuable time analyzing properties that have been canceled.

What about new or multiple foreclosure filings against the same property?
New foreclosures on the same property can be filed at any time. Some properties can have multiple foreclosures at the same time against different loans associated with the property. Tracking gives you quick access to current information about new filings and multiple foreclosures.

Read more: Foreclosure Resources