Properties are foreclosed almost every day in the real estate market. Investors find golden opportunities in these foreclosure circumstances because they can buy the property and sell it in an up market. There are numerous potential buyers for the property and the investor can resell it for a good amount of profit. The more the property is renovated, the better the prices will be when reselling it and hence more profit. The property can also be rented out by the investor to bring in monthly earnings.

There are several types of property sales and one of them is the pre-closure for sale. This occurs when the homeowner has defaulted on past monthly payments and the creditor allows them to sell the home and pay them the amount owed. This saves the lender the tedious work of having to repossess the home and then find a buyer for it. An investor wishing to purchase this kind of property is at an advantageous position since the property comes at a discounted price and the purchase process is fast.

A foreclosure auction is usually held within a courthouse of a county within which the property is located. The interested investors bid for the property and the prices are reasonable.  The bidding process is competitive thus resulting in a good price for the property.

Another way to purchase foreclosed property is through the Real Estate Owned properties, popularly referred to as REOs. In this case, the lender repossesses the property and then sells it. The lender looks for potential buyers of the property within the shortest time possible and sells the newly acquired property.

Advantages and Disadvantages of Investing in Foreclosures.

The following are the advantages of investing in a foreclosed property;

  1. The purchasing process is speedy and less cumbersome since the seller is looking to sell the property in the shortest time possible so as to pay off the debt owed to the lender.
  2. The property comes at a discounted price and thus the investor pays less than what was originally incurred in the purchase of the property.
  3. In the case of a foreclosure auction, the price of the property is reasonable and fair due to the competitive bidding process
  4. For the Real Estate Owned Properties, the property taxes are up to date and the lender renovates and fixes the property before selling it.

The disadvantages of investing in foreclosures are as discussed below;

  1. The homeowner may be unwilling to sell the property due to sentimental value attachment and thus making the process difficult.
  2. Buying property through a foreclosure auction does not allow for inspection of the property before purchasing it thus making the purchase a gamble of the state of the property.
  3. Purchasing a house via a foreclosure auction requires payments through cash or a cheque which may be difficult for the investor to get on short notice.

The investor needs to conduct a thorough research and be well-informed before purchasing a property that is to be foreclosed. Inspection of the property is important to ensure it is still in good condition.