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Mortgage Owned Properties (REO)
Foreclosure Sale
If you can find a good deal in foreclosure sale, you can make substantial profit. Foreclosure sale has the highest profit with highest risk. But if you know what you are doing and you cover risk areas well, you can make a good profit. Foreclosure auction is advertised in the local newspaper or can be also found in local sheriff or county clerk office. Usually it is advertised 2 months to 1 year before the sale. During this time, you can do some research about the house before you go to the auction. It may not be possible to do interior inspection of the house but you can drive by to see the exterior and the area around it. There may be people still living in the property then you may have to evict them when you purchase the property.
You should also do title search on the property. This can be done by title or title insurance company. Foreclosure will not erase unpaid property taxes and senior liens. Only when first mortgage holder is foreclosing, junior liens are wiped out. If second or third mortgage holders are foreclosing, other liens don't get wiped out at foreclosure. If that happens, winning bidder ends up purchasing those liens and it becomes a financial disaster. Through title search, you have to make sure, first mortgage lien is foreclosing the property. IRS lien can remain on the property for up to 120days after foreclosure sale.
In foreclosure auction, you have to know how the auction operates, because they are usually same groups of people bidding, they might try to take you out early by bidding a lot. Deed of the property goes to the highest bidder. Often, financial lender will bid against you. This, however, is a good sign. If the financial lender doesn't want the property themselves, there must be some other lien bigger than their lien on the property or some good reason you shouldn't want it either.
Cashier's check or cash is needed to put as a deposit at the auction. Full payment is needed in specific period of time. If full amount is not paid on time, you can lose your deposit.
Want To Learn More About Foreclosure Investing?
Get Foreclosure Properties from Foreclosure ListingsRead Books on Foreclosure
Learn from Foreclosure Coach & Mentor.
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