How To Buy Real Estate - Foreclosures and Profit

By Leslie West


Real estate prices may be rising rapidly, however the knowledgeable and sensible investor will welcome the opportunity of a real estate foreclosure to increase his equity in real estate investments. Foreclosure is a procedure which enables the acquisition of real estate in affordable, if inflexible terms. Foreclosure ensues from the failure of the homeowner to pay his monthly payments to his creditor. Once the mortgagor has become insolvent, the bank or other type of mortgagee is entitled to post the property for public sale. The property from which they can no longer obtain any repayment is sold at public auction.

Subsequently, foreclosure for the mortgagor creates a negative credit posting and the possibility of increased income tax liability due to mortgage relief reported on a 1099 form. All kinds of legal entanglements could occur if fraud is involved in the obtaining of the financing. However, selling the property prior to foreclosure or giving a deed in lieu of foreclosure to the lender will help some with the credit blemish.

Purchasing properties at foreclosure is definitely one method to obtain bargains. Pre-foreclosures are another excellent opportunity to problem solve and profit. Most homeowners want to avoid a foreclosure with its financial consequences. Homeowners must be approached with the intent of helping them get out of a bad situation. They are vulnerable and do not need exploitation by greedy and morally challenged hucksters.

Solving the financial problems of the homeowner is not your responsibility. Your concern is acquiring the property at a fair price. Obtain the facts and check their accuracy before making a formal offer. Create back-doors or escape clauses to keep you from unanticipated problems. Try to take the property subject to the mortgage in order to minimize your risk. Check the title before, during and after contracting with the seller. You are looking for tax liens, federal tax liens, judgements and other encumbrances on the property. If the numbers do not work for a pre-foreclosure purchase you can pursue a short sale with the lender. This is basicly filling out a packet of forms with information so the lender can determine it is in their best interest to accept less than the mortgage owed. Rest assured you must do the work and know what to do in order for a lender to even look at your offer. A short sale can increase your profits dramatically. Short sales can be done before or after a foreclosure.

Foreclosures are great opportunities to acquire property. Finding properties in default is best if your friends inform you before the lists are published and more competitors appear. Become knowledgable about the properties title and physical condition. Determine how best to solve the homeowners house problem. Do not give up if the seller is stubborn or unreachable. Look for other solutions such a s a short sale. Do not settle for skinny deals. Plan for massive profits and only seek out properties you feel confident will satisfy your needs.

Leslie J West is a writer, publisher and real estate investor. Please visit ArticleGuild Article Directory or Setting-the-Standard Article Directory. Real estate flipping articles are at QnaGold.com Real Estate Flipping.

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