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Real Estate Foreclosures
When shopping for a home, in addition to looking for the home of your dreams, one that will be a safe haven and your pride and joy, you also want the perfect home at a nice price. One way to find an excellent bargain is to consider a foreclosed home. Keep in mind that when looking for a home, finding a bargain does not always mean you give up quality, location, or amenities.

Sadly, some people find themselves in a position without a job or dealing with an unexpected illness or family death, or divorce, and no longer able to make their mortgage payments. While this is truly an unfortunately situation for the seller, for the buyer, it opens up incredible doors of opportunity for the homebuyer in purchasing a home well below fair market value.

Generally, five methods are used for acquiring a foreclosed home. All of these methods with the exception of the Trustee Sale provide the opportunity for professional assistance in researching unpaid debt or liens.

Trustee Sale With this option, all footwork would be performed by you, but even so, most buyers prefer this option. This type of sale is an open auction to anyone and whoever is the highest bidder wins the house. The only drawback is that the home could need some repair. Other unexpected problems might include IRS redemption, payoff of superior loans, etc. If you are not an experienced buyer, this might not be the best option for you.

Delinquent Seller Of all the methods, this is the easiest. In this case, the owner has become delinquent on the monthly mortgage payments as well as tax and insurance. Because of this, the value of the home is reduced because of the lack of funds. As the homeowner realizes that he or she cannot become caught up, the home can be sold at a discounted price rather than going through the traditional process foreclosure.

Defaulted Seller In this situation, the homeowner has actually defaulted on the loan, meaning he or she is more than three months in the rears and has no intention or the ability to become caught up. The home will be listed publicly in the local newspaper for a period of three weeks and in a local adjudicated newspaper once a week for a three-week period. This occurs just prior to the Trustee Sale. If the there are buyers taking up residence in the home, they can negotiate a reasonable purchase price as well as terms with the defaulted seller. You may find yourself in fierce competition with investors looking for a bargain as well.

REO Lender For this method, a Trustee Sale is scheduled but there are no bidders present. The foreclosed property is sold to the REO lender who will then sell the property instead of keeping it. If you can find an REO lender who has recently acquired a foreclosed home, you can generally secure a great discount.

Friendly Junior Note This final method is a great way to purchase a foreclosed home without heavy competition but the process can be more complicated. Whoever holds the junior loan that is connected to the foreclosed loan will sell his or her deed of trust or promissory note at a significant discount.

If you are putting yourself in the home buying market and do not mind going an unconventional route, you might consider a foreclosed home. Although not all homes are in excellent condition or come without challenges, just to provide one example of what can happen, consider this true story. A newly married couple borrowed $10,000 and began their search for a foreclosed home. They showed up at the courthouse steps after finding one in the country on 10 acres. Bidding, the couple won.

The home had beautiful Mediterranean architecture, a swimming pool, Jacuzzi, and sat on 10 acres in a residential development. The land was well groomed and beautifully landscaped. The home itself required about $10,000 of updates and repair but after one year, the work was complete and the home gorgeous. The couple had a new appraisal performed on the home and was thrilled with the results. The home they purchased on the courthouse steps one year earlier for $89,000 appraised at $140,000! They have now lived in this home for the past 10 years and cannot imagine living anywhere else.

 
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