How to Buy a Foreclosure

1
How to Buy a Foreclosure

• The beginners guide to foreclosure home buying

2
Basic Tips for First-Time Homebuyers

• Try to get pre-qualified for a home loan. If your
  credit score is below 700 seek a credit repair
  service.
• If you have time hire a contractor and appraiser
  to inspect the home.
• Run a title search on the property.
• If you are unsure of your ability to purchase a
  home on your own hire a real estate agent.

3
Is Your State Judicial or Non-Judicial

• In a Judicial Foreclosure state
• The lender sues the homeowner in order to
  foreclose on the house.
• Homebuyers in these states may have to prove
  their ability to pay for the home in court.
• In a Non-Judicial Foreclosure state
• The lender is able to foreclose without the
  consent of a judge.
• Home loans with a Power of Sale clause also allow
  lenders to forgo the judicial process.

4
Foreclosure Timeline

• In a Judicial Foreclosure state
• The homeowner defaults on the mortgage.
• If the debt is not paid back a Lis Pendens (LIS)
  is issued informing the homeowner of the
  lenders intent to sue.
• In a Non-Judicial Foreclosure state
• The homeowner defaults on the deed of trust.
• If the debt is not paid back a Notice of Default
  (NOD) is issued alerting the homeowner of the
  default.

5
Foreclosure Timeline

• During this Pre-Foreclosure Period the homeowner
  has some options to stop foreclosure
• The best option is to pay back the loan in full.
• If this is not possible the homeowner may seek
  loan modification.
• Homeowners determined to keep their homes may
  file for bankruptcy.
• The homeowner may also choose to sell the home as
  a short sale.

6
Foreclosure Timeline

• In a Judicial Foreclosure state
• If the homeowner fails to alleviate the debt the
  judge will sign off on a Notice of Foreclosure
  Sale (NFS).
• The home will be listed for sale at auction.
• In a Non-Judicial Foreclosure state
• If the homeowner fails to alleviate the debt the
  lender will foreclose.
• The property is listed for sale at auction.
• This signals the start of the Auction Period.

7
Foreclosure Timeline

• During the Auction Period
• Potential homebuyers can bid on the home on its
  scheduled sale date.
• Auctions are very fast paced so attending one as
  a spectator first is recommended.
• If the home fails to sell at auction it
  becomes a Real Estate Owned (REO) property. This
  may happen if
• The home fails to meet an adequate minimum bid or
  
• The lender is the highest bidder.

8
Foreclosure Timeline

• During the REO Period 
• The lender may attempt to sell the home itself
  especially if the lender is a large bank with a
  dedicated REO department.
• However not all REOs are sold by banks.
  Government agencies that provide home loans such
  as HUD FHA and VA will often sell their
  foreclosures on their own.

9
Benefits to Buying an Auction Home

• Auctions also known as Sheriff Sales when
  conducted by a sheriff are the most common type
  of foreclosure sale.
• Its not difficult to predetermine your maximum
  bid if you research the prices for which similar
  foreclosures in the area sold. Run a title search
  and if theres time have the home inspected.
  You want to subtract the cost of needed repairs
  and liens from your bid.

10
Benefits to Buying a Short Sale

• Since the home hasnt been foreclosed on yet
  youd be helping the homeowner and the lender by
  providing them with the money to pay off the
  defaulted home loan.
• Short sales provide plenty of time to have the
  property appraised and inspected for damages.
• Youll be allowing the homeowner to walk away
  from the home with less credit damage than a
  foreclosure would cause.

11
Benefits to Buying an REO

• REOs allow homebuyers to buy a foreclosure
  directly from the bank. Some homebuyers prefer
  this over buying through the homeowner or buying
  a home at auction.
• Foreclosures owned by government agencies tend to
  be very well maintained. This may be a huge plus
  if you are interested in minimizing the amount of
  repairs you may need to make as much as possible.

12
For more Information
http//twitter.com/fcdeals http//www.foreclosure
deals.com/wp/feed/ http//www.linkedin.com/compan
y/foreclosure-deals http//www.facebook.com/Forec
losureDealsFanpage
http//www.foreclosuredeals.com/