Real estate investing, even in the real estate market of today, is still a way to ensure lasting financial security. It is a fast and safe method of wealth creation and buying foreclosed homes for sale has always been a popular investment method. Homes for sale due to foreclosures are at an all time high that apparently has not been seen in the past thirty years. Foreclosed homes for sale include government homes that have be taken due to failure to meet mortgage payments, or seizure due to unpaid taxes or other federal offences. Bank owned homes are due to default in mortgage repayments.
There are various types of foreclosure homes for sale. REO, which means "Real Estate Owned" by both government agencies and banks, default pre-foreclosures, which is self explanatory and homes for sale at foreclosure property auctions. These three are the vehicles that many be used by investors to secure a property at discounted prices. There is also the short sale but this falls under the auspices of pre-foreclosure so does not really require a category of its own.
It only takes the non-payment of three consecutive mortgage payments for the lender to start the foreclosure process on a home owner. Thereafter the lender is legally entitled to call for full payment of the outstanding principle unpaid balance of the debt.
There are both advantages and disadvantages to buying homes for sale in any one of the three methods available. But the advantages of buying bank or government owned REO's is everything has been taken care of on behalf of the new owner. They are ready to go. The previous owner has been evicted, the mortgage is foreclosed so the title is clear and any back taxes have also been paid. Basically the bank clears any liens on the title before they sell it to anyone. Understandably the bargain factor is less than with pre-foreclosure and auction sales but the risk involved is also less, as well as the headache factor.
If you are going to purchase REO homes for sale, make sure that your negotiation techniques are tight. Be prepared to swap offers and counter offers. Banks are not in the real estate business, they do not like playing landlord and want to get their money back as quickly as possible. Bank REO's are a burden on the liquidity of the bank and they may speed the process up by making terms more favorable for the investor.
Bear in mind to always inspect government and bank owned REO's they are subject to vandalism, particularly if they have not been occupied for a while and this could mean that major repairs are required. These homes are for sale "as-is" so always ensure that a "subject to inspection" clause is clearly defined in any offer to the bank, if you have not yet managed to inspect the property, this small clause will save you a great deal of trouble in the future.
Search foreclosurerepos.com/listings.html foreclosures by state or get more information on foreclosurerepos.com foreclosure homes at ForeclosureRepos.com.
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Kevin Simpson, GM Sales & Marketing
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