Finding great deals on foreclosures might require a little digging, but it’s definitely worth it. This article expands on the ideas we discussed in our first article, Locating Foreclosures.
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Question: How long does the foreclosure process take or when will it start for a homeowner who can't make their mortgage payments?
Answer: This depends upon what state the homeowner lives in, but usually it takes from 2 to 18 months, although this also depends on the loan terms. More importantly though, a bank can begin the foreclosure process if payments aren’t received within 150 days. If you're a homeowner, and you think you are not going to be able to make a payment, begin to talk to your mortgage company about this, the sooner the better.
Among all the methods to obtain foreclosures, you’ll probably hear more about auctions. Foreclosed properties are usually sold at auctions which function in basically the same way as an auction at the county fair or on eBay. The difference here, however, is that price tags are much higher and more risk is involved.
Poor decision making, lack of knowledge, and excitement during intense bidding (which leads to overbidding) can be catastrophic. For this reason, it’s wise to be calm, realistic, sensible, and most of all patient. You don’t want to overpay or end up with a piece of property you can’t afford.
Courthouses provide listings of upcoming auctions, as well as documents 30 to 180 days before a foreclosure occurs. According to law, a legal notice must be filed prior to the finalization of a foreclosure. In most states, a “forcible detainer” is also filed and can indicate various bits of information that may help you contact the owner directly: property address, name of homeowner, amount owed, etc.
Also, notices are written throughout the various stages of the foreclosure process. This information is recorded by the county clerk at your County Recorder’s Office and is available to everyone. All you have to do is visit your county’s office and search for a Notice of Default (NOD), lis pendens, or a Notice of Sale. One major advantage to this method is that you’ll be able to locate properties that haven’t been seen by online foreclosure data services.
Listed below are other tips to get you in touch with the right sources.
- Local banks are probably the easiest and most effective means to locate opportunities. Since most banks are involved in lending, they can lead you to future open lender sales and give you information about the applicable properties.
- Lending organizations such as Fannie Mae can be extremely useful if you can find their local office.
- Government agencies such as the Federal Housing Authority serve millions of homeowners nationwide and handle a fair amount of public sales.
You already know your local newspaper is a valuable tool, but you might wonder, “How exactly can I use it?” For starters, keep an eye out for ads that state “for sale by owner” and other related phrases. Sometimes, these listings are posted by desperate owners who can’t afford to lose money in a foreclosure. Or, if you wish to take a more active role (i.e. have the foreclosures come to you), simply post a listing that advertises you’re willing to buy homes. In this situation, you buy the home and lease and/or sell it back to the original owner. If you prefer to purchase the home without tenants, simply make that stipulation clear in the ad.
Quick Foreclosure Buying Tips :
- See if there are liens on the home
- Tour the home with an expert
- Check to see if a broker represents the home
- Hire an experienced agent who has purchased foreclosed homes before
As we discussed in our first foreclosures article, REOs can be exceptionally advantageous. Instead of consulting with the bank to find REOs, however, it might be easier to work with an asset management company. These are companies that act on behalf of investors (companies included), by overseeing purchasing, development, and property transactions, including foreclosures. Several of these companies post REO listings on their websites.
Your goal should be to develop an eye for locating foreclosures. If you’re familiar enough with an area and notice properties becoming vacant without a 'For Sale' sign staked in the yard, you might be in luck. Using a reverse directory, simply obtain the telephone number for that property and call the owner, who just might be willing to sell.
TIP: Be consistent in your search. Don’t look for a week, then stop looking for two, then resume your search. By exhausting all of these techniques on a regular basis, week after week and month after month, you’ll learn to spot the difference between “same old, same old” and a golden opportunity.
Plus, in this way you can expand your network, owners of homes might not want to sell now but perhaps later, or, companies you manage assests and property will know you're someone who's looking for foreclosed property, and contact you when something comes available.
Extra: All Foreclosure Information also has more information and resources about foreclosures.
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