Foreclosures - A Brief Explanation

Well the real estate industry particularly the mortgage companies are at the forefront of the double edge sword, foreclosures are at record highs in many major metropolitan areas, and experts are predicting that this is not the end.
On the other side of things, it is a prime market for real estate investors and families, or individuals, looking to get a piece of the "American Dream", if you are looking to buy a home or start investing in real estate now is the time.
Keep in mind that you are likely helping the owners out by buying a home foreclosure. Most laws regarding foreclosures are pretty clear, once a home is foreclosed the original owners can gain from the loss, therefore, if the home is foreclosed and the bank does not sell the house in a timely manner it may cost the previous owners a great deal of financial loss, in addition to the credit damage.
Some states require the homeowner to be in default on the mortgage payments by at least two months, prior to the lender giving a legal notice that it will exercise their right to foreclosure, or otherwise "repossess" the home. After the "Notice of Default" is published, the home is put up for sale at a public auction, however before all of this takes place the homeowner will be given a time frame in which they can bring the loan current with the lender. Individual states vary in the length of time given to the homeowner prior to the home foreclosure auction.
There is a variety of different foreclosures that you may see, REO's, Short Sales and NOD's they are all vary different in many ways. Buying distressed properties is a bit more complicated then simply looking at a home and getting a loan. You may need to do some rehab work prior to the home being ready for sale, or there may be liens and judgments that need to be resolved.
Short sales are homes that are about to become another foreclosures; however not all home foreclosures will result in a short sale. Short sales are what they sound like; it is home sold for less then what the balance of the loan to the mortgage company. REO's which stands for "real estate owned" properties, are essentially bank owned properties, meaning owned by the lender. In most cases, these foreclosures are assigned to a real estate company and managed by them instead of directly by the bank.
Short sale homes are usually a good place to start looking for potentially good investment properties. These types of investments generally happen at the last minute right before filing the foreclosure at the courthouse.
Getting a real estate agent that is experienced in these types of properties and transactions is the best approach. They can guide you in the process and will understand the procedure at every step. One very important thing to point out while investing in foreclosures is that everything moves along very fast; you will need to have your financing ready to go and be prepared to feel like you are being rushed during the process.
Remember investing in real estate take time, research and the ambition to do it; however if you do it right and get the right people involved you can make good money doing it.
Thomas Bladecki is the author and can provide additional information about foreclosure listings and the current real estate markets visit Home Foreclosure Help. You should also see his Foreclosure Blog for all the latest information about the real estate foreclosure market.
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