Buying Foreclosures?

Author:	Lucas Jones
Source:	Homes Discovered
Date:	August 28, 2006

Foreclosure typically has a bad wrap unless you're involved in real estate investing, then it can be a gold mine.  Buying foreclosure homes isn't easy and oftentimes it's a risky endeavor.  Common problems is overpaying for a property, the awkwardness of dealing with a family who is in financial trouble, or the occasional need to evict a distressed homeowner.  It's definitely not as easy as buying a regular home from a realtor.  For the saavy realtor or investor, foreclosures can be great bargains. When a homeowner is in default of their loan in Cleveland, it becomes property of the lender.  Lenders want to get rid of the home in as little time as possible.  They will then list the home at under market value in an effort to move the property as fast as possible. When a property goes into default after three to six months of missed payments, the lender issues a "notice of default."  This begins the "reinstatement period" which places the borrower on notice that he/she is facing foreclosure and gives the borrower typically five days before the home is auctioned off. The home will be sold to the highest bidder at a "trustee sale" if the default isn't corrected within three months.  If the house isn't sold for the amount owed, the lender takes control of the title. There are different ways to buy homes in foreclosure in Columbus and elsewhere.  Looking through public records, newspapers, and searching online are typically the most common methods of finding properties facing foreclosure.  The most common method of buying a home in default is directly from the homeowner.  Homeowners in the three-month default period will often sell to save their credit and possibly make some money off the house and not be left with nothing to show.  They will negotiate to avoid foreclosure. You can also "buy the note," which is effectually buying out the current loan(s) and catching up on all the missed payments.  You can also buy at auction which is the most risky method. Buying at auction is risky because you must know everything about the home on-the-spot.  You must know what the home is worth, how much is owed after the sale, and if there are any liens or title problems.  After all that you still might not know the home's condition and you might have to go through the trouble of evicting the former homeowner.  If a home goes to auction and still doesn't sell, then you can buy it directly from the lender.  To do it this way, you have to contact the lender the same day as the auction, and offer to buy it immediately. Buying a home in default is a risky venture and should only be attempted by those who have done their research and know a lot about real estate and the market.  Otherwise, you may end up with a big problem on your hands.

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