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What are the Various Stages of Foreclosures and How to Find Foreclosures For Sale at each Stage

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By : Fiona Livnat    99 or more times read
Basically a foreclosure is a situation in which a home owner defaults on the mortgage payments for his house. Such property which are foreclosures for sale are called as distressed because typically the home owner is in financial distress and has defaulted on his payments. The owner may be in financial distress because of the following reasons:

  • Laid off/fired or quit job

  • Unable to continue job due to medical conditions

  • Mounting debt and excessive bills

  • Tiff with co-owner or divorce

  • Relocation to another state due to job transfer

Getting foreclosures for sale does not happen in a day. A typical foreclosure process can extend over a few months. Each stage of foreclosure offers different types of opportunities to the potential buyer.

There are three stages of foreclosure such as 1) Pre-foreclosure 2) Foreclosure Auction 3) REO stage or Real Estate Owned by banks.

Pre-foreclosure is the first stage in the process of foreclosures for sale. In this stage the home owner has not paid up the mortgage of the loan for the first time and is now considered as a defaulter. A pre-foreclosure is also called as NOD (Notice of Default) Or Lis Pendens as a formal warning is sent to the home owner about default on his payment. Investors can find property at the cheapest rate at this stage. Further damage to the credit rating of the home owner can be avoided and the property can be transferred to the buyer at a mutually agreed upon rate. The best leads to learn about properties at this stage are attorneys, friends and acquaintances as well as real estate agents.

Foreclosure stage is the second step in foreclosures for sale. The auction is the next stage after the pre-foreclosure stage. You can attend an auction and bid for the property. Usually the auction is held at the county clerk’s office.

During an auction, the lender tries his best to get the best possible price on the property under foreclosure. At an auction sale, buyers are required to buy in cash and without having the facility for prior inspection of the property in concern. However an auction sale does permit good bargains as much as 40 to 50 percent below market value.

The best way to identify foreclosures for sale at this stage is via the county clerk’s office. Find out about notices of default that have been filed to locate pending foreclosure sales.

The foreclosure process will vary from state to state depending on whether it is a title or lien state which determines a judicial or non judicial form of foreclosure. Judicial foreclosures pertain to mortgages and take long to finish. Non judicial foreclosures involve deeds of trust, where a third party, a trustee handles the property after period of default.

Third stage is Real Estate Owned (REO) stage where the property reverts to the bank. REO properties are also a good opportunity to purchase foreclosures for sale as the bank is in a hurry to get rid of its "non performing asset". Thus at each stage of foreclosure, there are numerous opportunities for obtaining foreclosures for sale.
Fiona Livnat is an author with expertise in real estate foreclosures. She has over ten years of experience in writing about foreclosures.Her commitment to help people is reflected in her writing. For more details please visit foreclosures for sale.

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